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Long-standing deputy expelled from Duma

New fast food options target the health-conscious office worker

Russian star returns to the Metropolitan Opera stage

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Diamonds Revelation of super-hard gem deposit causes industry to reconsider the use of natural stones

Eastern Siberia’s Glittering Game-Changer Discovered in the 1970s but kept secret by the Soviets, a deposit in Siberia has enough diamonds to satisfy the world’s industrial demand for 3,000 years. ANASTASIA VEDENEYEVA, EKATERINA GABELEVA

WEDNESDAY, SEPTEMBER 26, 2012

NEWS IN BRIEF Russia Backs Out of Kyoto 2.0 Russia has declined to accept commitments under the second phase of the Kyoto Protocol.“Russia’s decision is based on comprehensive analysis of the modern environmental, economic and political realities,” said Foreign Ministry spokesman Alexander Lukashevich, announcing the decision, noting that Russia is not categorically against the Kyoto Protocol, but does not see much point in an agreement that does not involve the United States and China. The commitments stipulated by the current format of the Kyoto Protocol apply only to developed countries and cover about 30 percent of global greenhouse gas emissions.

Vladivostok Beneﬁts from Successful APEC Summit

ITAR-TASS

KOMMERSANT

The 2012 APEC summit wrapped up in the Pacific port city of Vladivostok on Sept. 9, but the legacy of the meeting remains — and not only in the form of some dramatic infrastructure upgrades. Vladivostok’s reconstruction, which involved new roads and a stunning bridge, went off on time and without a hitch. Equally important, the summit was a platform for discussion about the risks and opportunities of free trade, resulting in a number of important investment deals for Russia’s Far East — including the first-ever launch of a Mazda assembly line outside of Japan.

PRESS PHOTO

A deposit of super-hard diamonds located in an asteroid crater between the Krasnoyarsk Territory in Eastern Siberia and the Republic of Sakha (Yakutia) in the Russian Far East has finally been declassified. The deposit, known as the Popigai Astroblem, was discovered in the 1970s, but Soviet scientists decided to keep the find secret since, according to geologist Alexander Portnov, they did not know the best way to make use of the diamonds. Typically, naturally occurring diamonds are not suitable for industrial use because of their unpredictable and non-standard characteristics. However, experts agree that the unique properties of these diamonds make them suitable for use in high-tech optics and electronics. “Research into impact diamonds had been classified for a very long time, because the reserves are immense, but [Soviet] scientists did not believe they could be used in industry,” said Portnov. “The very possibility of their application in the manufacturing sector is a sensation.” Impact diamonds are created when an object such as a meteor hits an existing diamond deposit. They are known for their large grain size. Industrial use of diamonds amounts to approximately 5 billion carats, but most of these diamonds are produced artificially, said Sergei Goryainov, an observer at the Rough & Polished information and analysis agency.

ITAR-TASS

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Politics & Society

Read more about the summit at rbth.ru/apec

“Industrial diamonds have multiple applications, but the thing is that successful crystal synthesis experiments resulted in the appearance of numerous synthetic diamonds with tailor-made properties,” Goryainov said. “When you extract natural diamonds, you can never be sure about the exact properties. The share of natural diamonds on the market for industrial crystals is currently quite insignificant.” Despite the overall industry

preference for synthetic diamonds, a few big corporations have expressed an interest in the rediscovered deposit, said Nikolai Pokhilenko, director of the Novosibirsk Institute of Geology and Mineralogy. “They have peculiar properties. They are harder, much harder than the ordinary diamonds we all know. They can revolutionize the tool-making industry, drilling, processing, because they are the hardest natural material

Restaurants Creativity wins in Moscow market

While diamonds intended for jewelry are prized for their beauty, diamonds used in industry are valued for their super-hardness and particular molecular structure.

known. They can be applied in high-tech industries: electronics, optics, production of high-precision lenses,”Pokhilenko said.“We see excellent prospects — and some big corporations, such as De Beers and some Chinese companies, have already shown an interest.” Scientists believe that the Popigai Astroblem has enough diamond reserves to meet the entire world’s industrial demand for the next 3,000 years.

Politics Protestors take to the streets again

U.S.A.I.D. to Close Office After two decades of working in Russia, the Russian office of the United States Agency for International Development (U.S.A.I.D.) will shut its door as of Oct. 1 at the request of the Russian government.U.S.A.I.D., which has a mandate to support U.S. foreign policy, has spent more than $2.6 billion in Russia funding health care, educational and environmental programs as well as promoting democratic reforms.

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Opposition Ready for Fall Political Season The Russian opposition has adjusted its objectives for the new political season, taking into account the Pussy Riot case and arrests during earlier protests. PAVEL NIKULIN RUSSIA BEYOND THE HEADLINES

Restaurants are popping up in Moscow — but with few people eating out, the competition for customers has produced some interesting developments. ANNA VASILYEVA, ARTEM GALUSTIAN KOMMERSANT-DENGI

The average Russian visits a café or a restaurant about seven times a year, according to a recent study by BusinessStat. A typical question on frequent diner card applications ask customers if they

visit a restaurant once a month, once every six months, or once a year. The BusinessStat survey also found that while the restaurant business in Russia has grown by 17.8 percent over the past year, the number of customers increased by just 3 percent. In order to cope with this increased competition, Moscow restaurants find they have to expand their offerings. CONTINUED ON PAGE 3

KOMMERSANT

Not Just Eating Out

DOME, a barcafe with its own cinema, is a mash-up of the dreams of its owners: One wanted to open a restaurant while the other wanted a small theater in which he could visit with friends.

Opponents of the Russian political establishment gathered for another March of Millions on Sept. 15, marking the opening of the fall protest season. More protests, monitoring of October’s regional elections and the struggle for the release of arrested protesters will be at the top of the agenda for the Russian opposition this fall, according to opposition activists. Observers, however, expect to see a change in the tactics and strategy of the opposition, including more specific social demands from protestors and anticlerical slogans. Ilya Yashin, one of the leaders of the Solidarnost political movement, told reporters that mem-

bers of the opposition might start using social slogans, but political expert Alexei Mukhin believes that they will take a back seat to ones about freedom of speech and assembly. Slogans demanding changes in social services are traditionally popular in Russia, and they could be especially relevant this fall, when the Russians back from summer holidays see the impact of the recent increase in utility fees, which came into effect on July 1. But given the ongoing media coverage of controversial laws on Internet freedom and nongovernmental organizations, Mukhin says that the opposition will focus on issues that can be interpreted as repression. “These include the Pussy Riot trial and the arrests of protesters during the rally on May 6, whom the opposition regards as political prisoners,” said Mukhin. CONTINUED ON PAGE 2

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Opposition Readies for Fall Season CONTINUED FROM PAGE 1

Taking to the Streets, but to What End? Following the State Duma elections on Dec. 4, 2011, Russians spontaneously took to the streets in the biggest protests the country had seen since the early 1990s. Driven by frustration with the lack of transparency and engagement in the political system, the protest movement continued to grow throughout the winter, spearheaded by such leaders as anticorruption blogger Alexei Navalny, long-time liberal politician

Boris Nemtsov and Left Front leader Sergei Udaltsov. However, while protests continue to draw large crowds, the future of the movement remains uncertain as long as taking to the streets remains its only activity. Some activists have taken more concrete actions such as monitoring of polling places or running for local office, but the movement as a whole remains mostly directionless.

THE NUMBERS

14,000

protestors participated in the Sept. 15 March of Millions, according to police reports. Organizers reported 100,000.

political parties are currently registered in Russia. Nearly 200 others are in the process of being registered.

people are still being held on suspicion of inciting violence during the May 6 opposition protest.

Russia’s antigovernment opposition continues to draw crowds, as evidenced at a Sept. 15 march in Moscow.

RUSLAN SUKHUSHIN (2)

The demand to release political prisoners is another topic that is quite popular with opposition activists, even though the term“political prisoner” is not defined in Russian legislation. The opposition cannot agree whether the members of Pussy Riot are prisoners of conscience or not, but they have no doubts that the protestors arrested in May fit this category. The opposition promises that those who took part in earlier protests will not be forgotten during the upcoming marches.“They won’t match the fuss caused by the Pussy Riot case, but the prisoners of May 6 will dominate the agenda,” said SergeiVlasov, spokesman for the Rosuznik human rights project. One important mission for the opposition this political season is to create legitimate organizations. To this end, the opposition will hold elections at the end of October for a coordinating council, which is intended to bring together protest-minded politicians. There have been many attempts to create such an association, but so far none has been successful. The new coordinating council has a far better chance of becoming legitimate, however, because opposition activists will have a real election, both online and at polling stations in many Russian regions. Both professional opposition politicians and little-known activists will run for seats in the council, including Novosibirsk artist and activist Artyom Loskutov. “My objective is to raise, among other things, the issue of

Former Duma Deputy Gennady Gudkov (right) never misses a protest.

with the church,” Pribylovsky said. “They are dissatisfied with the degree of its involvement in the life of the country, but anticlericalism will hardly make it into the top 10 slogans.” The demand for fair elections is a longstanding opposition slogan that remains relevant. During the previous political season, which involved both State Duma and presidential elections, civil activists moved from chanting in squares to real action — they signed up as election observers and formed flying squads to prevent ballot fraud. Opposition groups promise to be equally thorough when mon-

anticlericalism in the opposition,” Loskutov said. “Politicians are afraid to do that, trying to distance themselves from the Pussy Riot protest. If they don’t have the guts to speak against the fusion of the church and the state, then I will. Not everyone will approve of my mission to stop them from clericalizing society.” In the wake of the Pussy Riot trial, the relationship between church and society has become one of the hottest topics in the press and the blogosphere. Political expert Vladimir Pribylovsky has doubts that the antichurch slogans will be successful. “Opposition leaders have a problem

itoring the regional elections scheduled for Oct. 14.“I observed the Duma elections in the small town of Kasimov this summer,” said Rustam, who observes elections for the Russian Union of Observers.“I guess it was because the elections were fair that the candidate of the party in power received just 55 percent of the votes, not 95 percent. Khimki, near Moscow, will be our next battlefield, and we’ll be strong enough to cover all the polling stations and prevent fraud.” The Central Election Commission expects record numbers of observers at polling stations during the regional vote.

N.G.O.s Russia’s oldest nongovernmental organizations take a stand against a new law that they say undermines their work and legitmacy

Two of Russia’s oldest humanrights organizations have announced their intention to boycott a law declaring N.G.O.s “foreign agents.” DMITRY RUNKEVICH IZVESTIA

A number of Russian humanrights activists, including Memorial and the Moscow Helsinki Group, have declared that they will refuse to cooperate with a new law targeted at nongovernmental organizations (N.G.O.s). The activists intend to protest the law, which requires all organizations that receive funding from abroad to declare themselves as “foreign agents.” Alexander Cherkasov, head of Memorial, Russia’s largest human-rights organization, said that he has no intention of accepting the status of foreign agent and that he will refuse to cooperate with the laws passed this summer by the Russian State Duma. “First, we don’t consider ourselves to be ‘foreign agents,’ as

they have chosen to describe us. Agents carry out some sort of task in exchange for money, but we don’t do this,” said Cherkasov. “In their wisdom, our legislators have decided to spend their time coming up with ridiculous schemes, as if they don’t have enough real problems to be dealing with, but we are not going to cooperate with their absurd decisions.” The protesting N.G.O.s also intend to refuse to pay any fines they might face for not observing the new regulations. Cherkasov claims that the law has not been thought through properly; he believes the meaning of the word “agent” has been skewed and the idea of“political activity”has been understood very loosely. Lyudmila Alexeeva, head of the Moscow Helsinki Group, supports Cherkasov’s decision and confirms that, despite the threat of fines, her long-established human rights group will also refuse to register as a foreign agent.

“We do not think of ourselves as foreign agents, and we are not foreign agents. We have always been open and honest with our state and with our nation, so we find it very offensive that they are trying to label us as some sort of agent and threatening us with fines,”said Alexeeva.“We receive grants from abroad and spend the

“We’ve been honest with our state and with our nation, so we find it very offensive,” said Alexeeva. money on defending human rights — our job is to help people in need, and that is all there is to it. So their labels mean nothing at all. We would only turn down foreign grants if we were threatened with closure, and then we’d have to survive on Russian aid; but at the moment funding from Russia is very scarce.” State Duma deputy Alexander

Sidyakin, the author of the controversial provisions, has maintained that human-rights organizations who refuse to comply could face closure if they insist on sabotaging the law. “With the introduction of fines, the new regulations are now very clear. Representatives of human rights organizations should understand that this is a federal law that must be respected,” Sidyakin said.“If they decide their budget can stretch to pay the 1.5 million ruble ($47,700) fine, then that’s great—they can go ahead and pay; but they shouldn’t forget that, once they have paid a few fines, they may be accused of flagrant non-compliance with a federal law. And, according to the current rules, this could constitute grounds for the forced closure of the organization.” Memorial and the Moscow Helsinki Group are the biggest and oldest human-rights organizations in Russia; both were founded before the fall of the Soviet Union.

KOMMERSANT

Organizations to Boycott New Law on N.G.O.s

Lyudmila Alexeeva (left) heads the Moscow Helsinki Group.

About the N.G.O. law In July 2012, amendments to Russia’s law on nongovernmental organizations (N.G.O.s) went into effect. According to the new regulations, politically active organizations that are financed by bodies outside of the Russian Federation have to officially register themselves at the Ministry of Justice on a separate list and accept the status of “foreign agent.” These “agents” will also be obliged to indicate their sta-

tus on all of their printed materials. If organizations do not comply with these rules, group leaders risk substantial fines and criminal charges that could entail a prison sentence of up to four years. Opponents of the law say it undermines the development of the country’s independent civil society and is a death sentence for many organizations, as opportunities for raising funds in Russia are limited.

Politicians Legislator expelled from the Russian State Duma claims discrimination based on his support of the opposition movement

For Ousted Deputy, Political Becomes Personal Opposition activists see bias in the expulsion of Gennady Gudkov from the State Duma; government supporters say he simply broke the law. OLGA DORONINA RUSSIA BEYOND THE HEADLINES

On Sept. 14, the State Duma voted to strip Gennady Gudkov, a longserving member of Just Russia, of his seat in the body for violating a federal law prohibiting politicians from engaging in commercial activity. Gudkov has not d e n i e d b e i n g i nvo lve d i n business and is the owner of many private security firms through a holding company called the Oskord Association. However, Gudkov supporters link his ouster to his support of antigoverment protests.

Gudkov is well known in the world of politics.The retired F.S.B. colonel and former K.G.B. officer-turned-businessman was first elected to the State Duma in 2001 and served four consecutive terms, but he became an active opposition figure following the December parliamentary elections; he has not missed a single major opposition rally in Moscow since. Gudkov has fought for opposition rights not only in the capital but also in the regions, traveling to Astrakhan to support Oleg Shein, a fellow Just Russia member who went on a hunger strike after losing the race for the Astrakhan mayor’s office. Gudkov’s oppositional activities have not gone unnoticed by the Kremlin. At least that’s what the politician has been claiming,

Gudkov: Innocent Victim or Criminal?

SOURCE: THE ALL-RUSSIA PUBLIC OPINION RESEARCH CENTER (VTSIOM)

ascribing his tribulations to the powers that be. This summer, a complaint against Gudkov was filed by Ivailo Zartov, a Bulgarian citizen and Gudkov’s former business associate, who claimed that Gudkov owned a business in Bulgaria. Investigators were quick to confirm this report and considered it appropriate to initiate criminal proceedings against the Duma deputy. Gudkov’s son, Dmitry Gudkov, also a Duma deputy, believes that his father is not the only businessman in government. He has launched an online project aimed at identifying entrepreneurs among deputies in the ruling United Russia party. The younger Gudkov says that the lower chamber is home to 93 United Russia deputies who are share-

holders in companies, most of whom could be also suspected of being businesspeople. The politician has been posting his findings online. For its part, the Kremlin has stated that investigations into other deputies are ongoing and that others will follow Gudkov out of parliament. Just Russia leader Sergei Mironov said Gudkov will become an aide to a Just Russia deputy and will continue to play a role in the party’s faction in the Duma. “He is an active member of our party and will continue his political activities,” Mironov said. He noted that Gudkov will not be able to take part in plenary sessions, “however, no one can prohibit him from having his viewpoint and making critical statements.”

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Food Russians explore new ways of eating out and eating better, whether grabbing a quick bite at the office or going for a special meal A small piece of a small market The capacity of the Russian market for corporate catering is about $8.25 billion, according to the Sodexo catering company. Of the total, outsourced services account for $1.85 billion, according to Sodexo analyst Denis Shershnev. The biggest market players in Russia, other than Sodexo, are CorpusGroup and Megafoods (which both specialize in industrial facilities), CantinaCity (which targets offices), O.M.C., and CompassGroup. Local restaurant owners are also trying to move into this market. Nearly all the corporate catering market players currently offer healthy options, according to Ernest Lepsky, general director of ca-

GETTY IMAGES/FOTOBANK

Moscow’s Newest Health Craze Comes in Glass and Steel A company aptly named Healthy Food hopes to encourage office workers to eat better — with the help of in-office vending machines. ELENA GORELOVA VEDOMOSTI.RU

Maria Kolosova and Dmitry Pronin became friends when they worked on the same development project. Kolosova was outsourced as an advisor to Uralsib, where Pronin held a top position. They saw at once that they had a lot in common. Both tried to live a healthy lifestyle — Kolosova is a marathon runner and Pronin

plays amateur sports — and both were interested in starting a business. When the development project at Uralsib was halted, Kolosova and Pronin decided to try and start a business together based on their common interest in healthy eating. “Dmitry brought a suitcase of products marked as healthy foods from Europe, but many contained mayonnaise, preservatives and vinegar,” Kolosova said. “So I started making up recipes in my own kitchen.” Kolosova and Pronin named their company Healthy Food and

The Healthy Food company started selling food from vending machines in its first year of business.

worked on creating lunch options that fit the label. They wanted to offer a broad range of choices, so they worked on developing lowfat cheesecake along with wraps featuring fresh fillings of meat, fish and vegetables.They replaced mayonnaise with a signature cheese sauce made from Finnish brie and cream, as well as cranberry and celery sauces. In January 2009, the first Healthy Food café opened in the Krylatskie Kholmy business center, home to 10,000 office workers. Kolosova and Pronin hired cooks, but Kolosova found that starting a small business takes

The Healthy Food company has developed low-fat cheesecake along with wraps featuring fresh fillings of meat and vegetables.

It’s fairly easy to convince an office to accept a vending machine, as they take up a small amount of space.

more hours than you can pay employees to work.“The cooks went home at night and I had to cook myself and ask my children for help,” Kolosova said. After six months, the partners paid their first wages out of profits. The project required about 10 million rubles ($300,000) in investments during the first year. Kolosova sold her two-bedroom apartment in Moscow; Pronin sold his car, stocks and his Patek Philippe watch. “Many people don’t feel the need to eat healthy food, so we have to inculcate this idea into the public,” Kolosova said. She began holding regular corporate training sessions on healthy lifestyles, giving lectures on food choices and how to incorporate exercise into the workday. This side business laid the foundations

for the Healthy Food marketing campaign. The company opened several new cafés, but later had to shut down 20 percent of them due to lack of demand. But even this was part of the learning curve. “We have gained experience and don’t open cafes in the wrong places anymore,” Kolosova said. Today, Healthy Food has 14 successful cafés. The company started selling food from vending machines during its first year. Pronin says that vending specialists did not believe they could be successful selling products with a short shelf life from machines. But the partners believed that vending machines were an important part of their business plan. They say it is fairly easy to convince an office to accept a vending machine,

KOMMERSANT

The Tsyferblat café offers a series of activities to give it an edge in the competition for consumers. CONTINUED FROM PAGE 1

The concept is known in the Russian market as“restaurant +”and its pioneers are Dmitry Itskovich and his former business partner Mitya Borisov. Their first restaurant had a bookstore attached. The model has expanded somewhat since then. In 2010, Borisov and Dmitry Yampolsky opened the Mart Café. Located on the ground level of the Moscow Contemporary Art Museum, it brings together a café, bookstore, exhibition area, music club and a greenhouse in a single space. Another “restaurant +” is the Shardam Club at the Central House of Artists, which is devoted to children and is a popular place for families featuring good food and the possibility of drawing graffiti on the walls or taking part in a scientific experiment. Wine rooms, which often combine a shop and a bar, provided the inspiration for such projects as“restaurant + grocery”(LavkaLavka) and“restaurant + market” (Farmer Bazaar). LavkaLavka allows patrons to taste homegrown produce before they buy. Popular options are goat’s milk in a can at 350 rubles ($11.50) per liter or

a kilo of bulb onions “straight from the ground” for 180 rubles ($6). You can also get scrambled ostrich eggs for 1,500 rubles ($50). The Farmer Bazaar project operates as part of a farmers’ support program, but the prices here are higher than at regular farmers’ markets. However, at this bazaar, customers can haggle over the price of giant Sakhalin oysters or a marbled beef steak. Sometimes a project is the result of conflicting wishes of its authors. The DOME project (a “restaurant + cinema”) is a case in point. One of the founders wanted to have a pleasant atmospheric restaurant, while the other wanted a small cinema for friends, said Artem Kalashian, the project’s P.R. manager. As a result, the facility has a café seating 60–70 and a projection room with cushions for up to 100 people. There is no need to reserve a seat at the cinema; instead, you can order food brought from the restaurant. The minimum order is about $30, but the place is anything but cheap. “Visitors liked the idea of watching a film,” said Kalashian. “Sneak previews and special screenings of films that do not go on general release for some reason are particularly popular.”

IN NUMBERS

times a year is the average number of times a Russian visits a café or a restaurant, according to a recent study by BusinessStat.

17.8%

is how much the restaurant business in Russia has grown over the past year.

$65

is what it costs to eat a prixfixe meal in the dark at the experimental Moscow restaurant V temnote.

Some Moscow restaurants, such as “V temnote,” look more like social projects than commercial ones.

as they take up a small amount of space. Then, after the office workers are used to the menu, it is easier to convince management to open a café. Now the company has more than 30 machines, which account for 10–15 percent of Healthy Food’s total income. Kolosova admits that it is hard to monitor the quality of perishable items in vending machines. She says the company works with distributors and consumers to address quality-control complaints. “First, we check the temperature in the machine, on each shelf, then we look at how the quality of foods was checked when it was accepted from the suppliers, and then we offer the dissatisfied customer compensation in the form of our products,” Kolosova said. One of the key problems is that cottage cheese suppliers fail to meet the contracted 10-day shelf life requirement, and cottage cheese is a major ingredient in the company’s cheesecakes. Healthy Foods has changed cottage cheese suppliers 20 times since the business began. Healthy Food is now hoping to branch out to a broader audience. It has created a café format called, “Cook, Little Pot!”for food courts in malls. The first storefront will open this month. Regular dishes including cabbage soup, ragouts and hot cereals will be cooked and served in clay pots.

Imports Sub chains look for new customers

ALAMY/LEGION MEDIA

A New Twist on Eating Out Nevertheless, the owners consider their no-frills cafeteria, which caters to people who work in the area, to be the more solid project commercially. “On the whole, conceptual restaurants remain a challenging type of business,”saidYulia Matveyeva, editor of the FoodService magazine. “If you compare the earnings of a conceptual cinema club and an average Moscow coffeeshop, the latter wins hands down.” Some Moscow restaurants look more like social projects than commercial ones. For example, the already well-known restaurant V temnote (“In the Dark”) offers its customers the opportunity to have lunch or dinner in total darkness. Its founder, Igor Medvedev, is an eye specialist and owner of the I-Med holding. I-Med consists of an eye clinic and a restaurant in one building. Medvedev says he does not consider the restaurant to be a real business; rather, it plays a role in integrating blind people into Russian society. All the waiters and bartenders are blind. It also offers free meals to the clinic’s staff. The restaurant serves meals only by reservation, but has three seatings on weekdays and four on weekends. A session at V temnote goes like this. First, in a lighted room, the visitor chooses a menu by color: white has food from all kinds of products, red is for beef, blue for fish and seafood, green for vegetarian and yellow for Japanese food. After choosing, the guest proceeds to a room in semidarkness, where he leaves his things and is advised“to trust and not try to peek because you won’t see anything anyway.” After having the meal, the guests emerge into the light to be told what they had just eaten. The session lasts about an hour and a half and costs about 2,000 rubles ($65). The humanitarian mission — to allow visitors to“feel what blind people feel” — has a tongue-incheek element. The restaurant also offers a Dating Certificate program, which seats strangers together. “People come here mostly in search of new sensations,” said General Director Vitaly Smirnov.“Here all the social barriers — status, age and appearance — come down and the sense of taste becomes more acute.”

tering firm LanCh, and Shershnev says that the market is growing. Said Shershnev: “Cafés with a healthy-eating concept enjoy a growing demand, but I don’t believe that sales of such foods in vending machines have a future,” adding that machines are not associated with healthy fresh foods, and cheesecake should be eaten fresh. Other experts disagree, saying that there is potential in the concept. “Vending machines offering healthy foods are better than courier delivery. You can have snacks more often, which is healthier, according to nutritionists,” said Yury Balushkin, development director of the Zdorovye (health) magazine.

The Quiznos chain includes more than 4,500 restaurants worldwide.

Quiznos to Take on Subway in St. Petersburg American restaurant chain Quiznos plans to open up to 20 branches in Russia by 2014 to meet the increasing demand for food on the go. IRINA LAPECHENKOVA RBC DAILY

The American fast-food chain Quiznos will invest about $4 million in the expansion of its brand in Russia with the goal of opening its first restaurants by the end of the year, according to Quiznos Chairman Darrin Stock. The first Russian Quiznos will open in St. Petersburg, and experts say that if the format proves to be successful in that Northern city, the company should have no difficulties with market entry in Moscow. Ivan Fedyakov, director general of INFOline, said Quiznos decided to start its development from the Northwest because the break-even point is difficult to reach in Moscow. Stock estimated that each new restaurant in Russia will require an investment of $200,000 and that each restaurant will employ between three and 10 people. Daily consumer traffic is expected to be about 350 people, and the average purchase size will be 300–350 rubles ($10–12). Stock emphasized that the company is

planning to purchase most of its products from local manufacturers for its menu, which features about 30 types of hot sandwiches along with soups and salads. “Our goal is to open hundreds of Quiznos restaurants across Russia in 10 years,” Stock said. The average fast-food purchase size in Russia is 170–350 rubles ($6–$12), but the total depends on the location, marketing policy and the specific offer, said a representative of competing sub chain Subway, where customers make purchases for an average of 200 rubles ($8) in St. Petersburg. Daniil Somov, managing partner of the Retailer publishing house, said that the market for Western fast-food brands is growing and welcoming to new players. However, Ivan Fedyakov said that Quiznos may face difficulties in finding appropriate space for its restaurants. In 2008–2009, many retail shops gave up their spaces to restaurants, but this trend is now over. Commenting on this challenge, Lyudmila Reva, director of ASTERA consulting, said, “It would be a logical choice for them to develop within large shopping malls. Fast-food operators renting spaces in food courts are able to forecast their customer flow.”

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Labor market A system set up for Soviet-style full employment has a hard time adapting to a more fluid concept of what it means to work

report their status, fearing claims by the tax authorities. The number of freelancers in the United States and Europe is substantially higher, according to Daria Grevtsova, executive director at the Center for the Study of Trade Unions, Protest Decisions and Social Peace. “In the late 1990s and early 2000s, about 30 million people had remote jobs in the U.S. and E.U.,”Grevtsova said.“At present,

Studies show that Russian employers use the services of freelancers less frequently than their foreign counterparts, but this could be changing. ALEXANDER KILYAKOV RUSSIA BEYOND THE HEADLINES

Freelancing is still a difficult concept for Russian employers to grasp, according to surveys. A recent study by the Board Solutions Consulting Company showed that over the past two years, the number of employers in Russia contracting with outside workers has increased only by 2 percent. Freelancing as an industry is very young, both in the literal and figurative sense of the word. Working on a freelance basis was impossible during the Soviet era, when people without a permanent workplace were considered parasites. As a result, few Russians had the ability to even explore this possibility until 20 years ago, and members of the older generation still find it a strange concept. According to Free-lance.ru, the share of freelancers between the ages of 18–22 is 20 percent while only 7 percent of this age group reports full-time employment. Among people aged 23–26, the statistics are similar — 20 percent of them report working as freelancers, while 11 percent of them are employed full time. Official statistics show that there are only 200,000 freelancers in Russia — just 0.3 percent of the working population. Many experts, however, believe that the actual number of freelancers is several times higher, but that these freelancers choose not to

Few Russians had the ability to even explore the possibility of working as a freelancer until 20 years ago. Statistics show that there are only 200,000 freelancers in Russia — just 0.3 percent of the working population. according to the different estimates, the number of people having their working places at home is about 55–60 million.” If the statistics are examined in another way, however, Russia does not seem so far behind the West. In Russia, the share of freelancers in the I.T. sphere is 35 percent of the total labor market, while in the U.S. it is 44–45 percent. Figures in the sphere of writing and business services are comparable in the two countries, and Russia is even ahead of Western countries in some fields, such as design. Natalia Golovanova, head of

the Superjob.ru Survey Portal, says that most Russian company heads are sure that people work better being in the office environment than out of it. “Thirty percent of employers who do not hire freelancers and 19 percent of those having freelancers on staff believe that people who work at home lie down on their jobs. According to only 6 percent of employers, the home environment helps freelance specialists work better than their office colleagues because nothing distracts them from the work. The overwhelming majority of employers, 72 percent, believe that even if freelancers work well, they have little chance of being promoted because they do not communicate with the company’s staff and little is known about them.” Freelance contracts in Russia usually pay people for a particular project rather than by the hour, which protects employers from lazy freelancers, according to Anna Kartashova, head of the Psychological Center at Volkhonka. “When not being watched, any normal human being tries to do less. In fact, it is a natural human characteristic and it should not be estimated as a bad quality. A worker tries to give less, while an employer tries to pay for the work done at the minimum rate; it is a law of business,”said Kartashova.“Thus, if you can control the result of the work and are ready to pay enough for the employee to do the work as required, and if he or she agrees to be paid only when there is a certain result, you can allow this person to work at any distance from the office.”

GETTY IMAGES/FOTOBANK

Russian Employers Reluctant to Trust Freelancers

While freelancing is a popular work option in many places, it has failed to gain much traction in Russia.

Freelancing in Russia, by the Numbers Monthly wages, in dollars

Higher education

Work schedule

Areas of employment

Number of freelancers SOURCE: HIGHER SCHOOL OF ECONOMICS AND THE WEBSITE FREE-LANCE.RU

Saving Overall trust in the government may affect the way Russians feel about a possible financial crisis

“The number of those who expect a crisis has risen by almost 20 percent since 2010; the people, of course, are no experts, but collective wisdom still exists, and if they feel something, there must be a reason for it,”said Romir President Andrei Milekhin. Referring to the lack of concern about a crisis, he added: “We have seen so many revolutions, disasters, wars and famines in the past 100 years that we’ve become quite adept at handling financial misfortunes.” Oleg Zamulin, dean of the faculty of economics at the Higher School of Economics, thinks expectations of what economic turm o i l m i g h t l o o k l i ke a re misguided. “If anything, prices won’t go up,” Zamulin said. “It’s incomes that will come down. People will start losing their jobs, and their wages will be cut.” Yet only 23 percent of those polled were preparing for a new wave of the crisis. Keeping sav-

Economic experts predict that a second wave of the financial crisis is about to hit Russia, but most people do not expect widespread job losses or pay cuts. VALERIYA KHAMRAEVA, MARINA MAKSIMOVA, ANNA REZNIKOVA RBC DAILY

W h i l e m o re t h a n h a l f o f Russians (56 percent) are expecting a second wave of the financial crisis to hit their country, they are not frightened by the prospect, according to a recent opinion poll by Romir Holding. Most of those surveyed believed economic turmoil would lead to price rises and lower living standards, but they don’t expect mass layoffs or pay cuts. More than 70 percent of respondents are not preparing their family budgets for economic trouble, while a third don’t intend to make any changes to their budgets even if the crisis strikes.

ITAR-TASS

Ready to Go With the Economic Flow

Russians believe a financial crisis is coming, but few are saving more.

“We have seen so many revolutions that we’ve become quite adept at handling misfortunes,” said Andrei Milekhin.

Ecology Artic clean-up aims to restore natural environment

Reclaiming the North Activists and the Russian government are working together to restore a fragile northern environment damaged by years of industrial development.

Investors Rewards worth the risk in Russia

Russia Leads Eastern Europe in F.D.I. Russia was the premier destination for investment in Central and Eastern Europe in 2011, but concerns remain about the country’s bureaucracy.

TATIANA SMOLYAKOVA RUSSIA BEYOND THE HEADLINES

VADIM VISLOGUZOV KOMMERSANT

PRESS PHOTO

This summer, a team of volunteers spent a month cleaning trash from a 2.3-square-mile area on Bely Island in the Kara Sea, the northernmost boundary of Russia’s Yamal-Nenets Autonomous District. They removed 75 tons of scrap metal and erected a church dedicated to sailors killed during World War II. The expedition was the beginning of an attempt to restore the natural environment after years of industrial development. According to district governor Dmitry Kobylkin, a full cleanup of the island will continue until the area’s ecology is fully restored. Volunteers from various organizations, including the People’s

ings in a foreign currency was the most common protection strategy (used by 9 percent) and, according to Romir experts, the preferred method of those with high incomes. Others are preparing for the crisis by stocking up on food (5 per-

Volunteers manually cleaned several miles of Bely Island.

Friendship University in Moscow, will continue restoration work next year as part of Russia’s broader national policy in the Arctic region. More than 25 percent of the world’s total gas reserves are located in the area, including at offshore sites in the Kara Sea, but far more is at stake than oil and

gas. Said Kobylkin, “We must enter the Arctic with science. That’s why we plan to establish an international ecology research center on Bely Island after restoration work is complete.” This article was prepared in cooperation with the Yamal Administration Press Service.

cent) or durable goods (5 percent). According to the Deposit Insurance Agency, Russians have been depositing 5.3 billion rubles every day since the beginning of the year, 30 percent more than in 2011.Total deposits have risen by 8.1 percent in the past six months (to 962 billion rubles). The remaining 77 percent of respondents are doing nothing to protect themselves from potential economic problems. Igor Nikolaev, director of the F.B.K. Company’s strategic analysis department, says this may be partly attributed to several factors including the fact that Russia was not hit too hard by the first wave of the crisis in 2008. “This raises the question of how much people really trust the state,” said political scientist Iosif Diskin, a member of the Civic Chamber. Disking believes that Russians are confident the government will, in his words, assure they “don’t feel the pain.”

Despite a low ranking — 120th place — in the 2011 Doing Business investment ratings and more than $80 billion of capital outflow, Russia does not seem to be a bad option for investors. According to an Ernst & Young report, last year Russia was the premier destination for investment in Central and Eastern Europe. Whereas foreign direct investment (F.D.I.) worldwide rose 16 percent to more than $1 trillion, F.D.I. into Russia grew 22 percent, up to $53 billion. According to the report, the country’s most attractive features

included its natural resources, growing domestic consumer market and high level of education. However, weaknesses were noted in Russia’s enduring reputation as a country with a difficult environment for doing business. The top three improvements investors would like to see in Russia are more effective legislation, less bureaucracy, and better transparency for business regulation. The survey further revealed that manufacturing remains at the heart of Russia’s appeal, accounting for 51 percent of investment projects and 92 percent of jobs created between 2007 and 2011. Russia’s biggest cities, Moscow and St Petersburg, accounted for 42 percent of all projects.

GLOBAL RUSSIA BUSINESS CALENDAR 2012 INTERNATIONAL M&A SUMMIT OCT. 9–10 2012 NEW YORK, N.Y.

This two-day event will bring together more than 50 industry stalwarts and 400 guests, including the world’s top dealmakers — private equity experts, institutional investors, legal and investment banking professionals — with other key market players — academics, media and political leaders — to discuss the key issues facing all the international M&A markets today. The summit will also feature the world’s first M&A in the BRICS Symposium. › maadvisor.com

8TH RUSSIA & C.I.S. HOTEL INVESTMENT CONFERENCE OCT. 15–17, 2012 MOSCOW, RUSSIA

This year’s conference will be one of the largest such gatherings ever held in Russia and the C.I.S., with more than 450 hotel investors, operators and developers expected to attend. Participants will gain insights from global leaders as to where the real opportunities lie in the region; discover successful strategies from those already operating in the market; and have the opportunity to listen to interviews with government officials and forecasts from top economists. › russia-cisconference.com

RUSSIAN INTERNET WEEK OCT. 17–19, 2012 MOSCOW, RUSSIA

This conference explores the multifaceted Russian Internet. Its events encompass almost all main activities of the Russian Web, including advertising, social media, Web development, project management, information security and statutory regulation. The participants include the bestknown gurus of the Russian Inter net as well as employees of Russian and foreign I.T. companies, government officials, representatives of industry-related ministries and institutions, journalists and Internet users. › 2012.russianinternetweek.ru

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Money & Markets

Banks Russian financial institutions expected to cave to international pressure

Companies New Apple Rus to handle sales

Banks to Keep Clients By Going Along With I.R.S.

Apple Cuts Out the Middlemen in Russia

Russian government authorites are working on a plan that will bring the country into compliance with U.S. legislation against money laundering.

Industry experts speculate that by limiting its work with subsidiaries, Apple will contribute to the normalization of the market for electronics.

ANASTASIA ALEKSEYEVSKIKH IZVESTIA

VLADISLAV NOVYI KOMMERSANT

American computer powerhouse Apple recently registered a company called Apple Rus to handle sales of its products in Russia. The registration means that the U.S. corporation could start directly supplying its products to retail stores in the country as soon as next year. A source close to the electronics retailer said that Apple board members looked for space to house an Apple Store during a visit in Spring 2011, but did not manage to reach a decision. According to the manager of an Apple distributor, it now seems the corporation is likely to start direct sales in 2013, but there are no estimates for when the first Apple Stores will be unveiled. Between 1996 and 2007, E.C.S. Group was in charge of selling and promoting Apple products in Russia. In 2007, the baton passed to Lanit Group. Today, three-fourths of Apple items sold in Russia are distributed through Lanit subsidiary diHouse. iPhones are supplied to Russian consumers throughVimpelcom and M.T.C. “By registering a legal entity on Russian soil, Apple is taking a serious step with a view to start supplying Russia with its products directly,” said Yevgeny Butman, co-owner of the Ideas4retail holding. According to Butman,

Presidential economic adviser Elvira Nabiullina (left) is spearheading Russia’s Fatca compliance effort.

OPTIONS FOR PARTICIPATION IN FATCA

An intergovernmental agreement between Russia and the U.S. under which Russian banks will enter into separate agreements with the I.R.S. and will disclose information on U.S. taxpayers directly to the U.S. tax authority.

Any Russian law regulating Fatca complaince must take into consideration the existing tax treaty. The second possible model also rests on an intergovernmental agreement that would, unlike the previous option, lay the groundwork for centralized disclosure. If the model is adopted, banks will be required to submit all relevant information about U.S. taxpayers to the national regulator, which will then pass it on to the I.R.S. In return, the United States pledges to disclose to its partner nations information about ac-

Russian banks will be required to submit all relevant information about the accounts of U.S. taxpayers to a national regulator in Russia, which will then pass the information on to the I.R.S. in a bundle.

counts opened with U.S. financial organizations by their relevant taxpaying residents. The third option, strictly in line with U.S. law, also suggests direct agreements between Russian banks and the I.R.S., but is even harder on the banks. Aside from reporting to the U.S. tax authorities, the banks would be under obligation to deduct a 30-percent tax from the accounts of those refusing to cooperate with the I.R.S. Any Russian federal law regulating Fatca compliance must be based on an intergovernmental agreement with the United States that is in line with the existing tax treaty, said Yemelin. Said Konstantin Trapaidze,

Aside from reporting to the United States tax authorities, the banks would be under obligation to deduct a 30-percent tax from or even close the accounts of those U.S. account-holders refusing to cooperate with the I.R.S.

chairman of the legal association Vash Yuridichesky Poverenny, “The most favorable and comfortable scenario for Russia would be to combine options. First, we have to go with individual agreements and work by this scheme until an intergovernmental agreement between Russia and the United States is reached on centralized transfer of information.” Meanwhile, the banks will have to bear the brunt of the accession anyway, according to head of financial monitoring at SMP Bank Inga Tumasyeva. “Either way, the banks will incur material costs involved in implementing the changes,”.Tumasyeva said. “They have no choice, though.”

KOMMERSANT

Russia’s presidential executive office has been reviewing the U.S. anti-money-laundering act known as Fatca (Foreign Account Tax Compliance Act) in preparation for accession to the law, which is expected to come into effect on Jan. 1, 2013. Fatca requires foreign banks holding accounts of U.S. taxpayers to enter into special agreements with the U.S. Internal Revenue Service (I.R.S.) stipulating that the banks will monitor such accounts and report on any operations to the I.R.S. Banks in the U.S. have been disclosing information about their clients to the I.R.S. for a long time, and the practice of reporting on American taxpayers is now to be extended globally. Should banks fail to comply, the I.R.S. promises to levy a 30-percent tax on operations with financial assets of U.S. account holders. To reduce the risks involved in direct agreements between nonU.S. financial institutions and the I.R.S., some countries — including France, Germany, Italy, Spain, the Netherlands, Switzerland, Japan and the U.K. — have declared their intention to enter into intergovernmental agreements with the U.S. regarding their participation in Fatca. In return, financial institutions of these countries will be exempt from the 30-percent tax and subject to a simplified reporting mechanism. Presidential economic adviser Elvira Nabiullina, in consultation with representatives from the Finance Ministry, the Foreign Ministry, the Central Bank and the Tax Authority, has developed several options for Russia’s participation in Fatca. The first option envisions an intergovernmental agreement between Russia and the United States, under which Russian banks will enter into separate agreements with the I.R.S. and disclose information on U.S. taxpayers directly. According to National Payment Council President Andrei Yemelin, this is the best option in view of the tight timeframe, though it is fraught with the risk of violating bank privacy laws.

Apple is taking a path typical of retailers moving into the Russian consumer market: they first work through a Russian partner, then register a local holding. It is possible that Apple Rus will also control iPhone distribution in Russia, says the manager of one of Apple’s distributors, who added that he had heard rumors the corporation was not happy with the existing system for distributing iPhones through Vimpelcom and M.T.S. because the operators were more interested in selling iPhones in their stores than on the wider market. M.T.S. representative Valeria Kuzmenko said her company has yet to discuss changes in the way iPhones are distributed in Russia with Apple, while Anna Aibesheva, a spokesperson for Vimpelcom, was only prepared to say that the operator maintains “a good working relationship”with Apple. According to a manager of one of the corporation’s distributors, by starting direct sales, Apple will take a cut of the profit that would otherwise go to the retailers, so it is possible that Apple would consider offering retailers a discount depending on their sales results. Said Danila Vaskevich, managing director of electronics chain Belyi Veter, “Samsung and Sony have been selling directly for a long time. If Apple follows their example, the price of electronic goods will become more accessible and the market itself will be more civilized.”

Credit Recent MasterCard research shows that Russians are using bank cards more actively, which concerns some financial experts

More Credit, More Spending, More Debt? Russians are known for avoiding debt and paying it off quickly, but experts fear this may change as the option to use bank cards becomes more widespread.

Growth in Use of Bank Cards in Russia, 2010–2012

ALEXEI KISELYOV KOMMERSANT FM

Less than 20 percent of all Russians do not use any kind of bank card at all, according to specialists at MasterCard. Eighty-three percent of Russians receive their salaries through direct deposit, which must be withdrawn with an A.T.M. card. Additionally, 16 percent of all Russians hold credit cards, and 12 percent of those polled said they had store-specific discount cards. According to the findings of MasterCard specialists, the number of Russians in possession of bank cards rose 11 percent from 2010. Russians are also becoming more active in their use of debit and credit cards. This year’s poll found that 40 percent of respon-

SOURCE: KOMMERSANT FM

dents paid for purchases with plastic cards, as compared to 27 percent the previous year. When asked why they prefer to pay by bank card, 60 percent of respondents mentioned convenience, 58 percent said they liked the security and speed of credit purchas-

Russia Beyond the Headlines ONLINE

es, and 34 percent cited the advantage of being able to shop for goods and services online. The popularity of bank cards in general bodes well for the future of credit cards in Russia, according to Sberbank Director of Client Relations Olga Bakhtina.

Should Innocence of Muslims be banned in Russia and over the world?

“A credit card allows a person to proceed without a moment’s hesitation, without a worry, to have access to a credit account and know only two things: that the credit card bill must be paid on time and that nothing but the card need trouble you,”Bakhtina

said.“ The use of credit cards will soon overtake the use of debit cards because credit cards are more convenient. It’s my hope that, in two or three years, none of us will be carrying around more cash in our wallets than is necessary to buy lunch.”

Happy birthday Moscow - 865 years young!

However, the dramatic increase in the number of credit cards has a flip side, as well. Consumers do not always realistically assess their ability to pay their credit card bill, said Pavel Samiev, deputy director of Expert RA, a leading Russian rating agency. Over the past two years, the average sum of a bill paid by credit card has decreased from 2,500 rubles ($78) to 2,200 rubles ($68). “Of late we’ve been hearing a lot of fairly alarmist forecasts concerning the fast growth of credit card volumes and of retail crediting in general,” said Samiev. “As a rule, retail is a hit with banks. It is the most interesting segment from the point of view of growth potential. But according to some prognoses, this may lead to an abrupt increase in delayed payments and to a substantial deterioration in payment discipline, thereby adding problems to those that still exist in the wake of the financial crisis.”

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TIME TO EMBRACE THE BUBBLE Vladislav Inozemtsev OGONIOK MAGAZINE

n recent years, Russia has been claiming to be spearheading a reform of the global financial system. I believe the time has come to ask ourselves in all sincerity if the critics of the current global financial regime can actually come up with something better that also addresses all the recognized problems with the system. First, it is important to identify the main complaints against the global financial system. Here is a short list: In recent years, the capital and derivative markets have suffered from bubbles that, when they explode, can have a catastrophic effect on the real sector; developed economies live mired in debt paid for by developing countries; economic imbalances keep growing, while consumption is skewed in favor of the “golden billion”; and finally, certain countries rule the world economy thanks to their ability to issue reserve currencies accepted by the rest of the world. Many economists in developing countries, Russia included, call this an abomination, but is it really true? At the end of 2011, the combined global capital market capitalization was valued at $47 trillion, or 67 percent of global G.D.P., compared to $2.9 trillion, or 34 percent, in 1960. Admittedly, as a result of the 2000–2002 and 2008– 2009 crises, this indicator shrank in the developed countries alone by $6.3 trillion and $10.2 trillion, respectively, which is a lot. But the global economy did not collapse. It did not contract in 2000– 2002 at all — in fact, it grew by 7 percent in the U.S. and by 5.3 percent in the EU. During the 2008–2009 crisis, the economy shrank by 3.8 percent in the U.S. and 3.7 percent in the E.U., but no financiers started jumping from their office windows. It seems that today the inflated financial sector serves more as a safety valve for the real economy, protecting it from overheating, which is

DMITRY DIVIN

However unfair the existing financial system might seem, any alternative to it would be less efficient. clearly a benefit rather than a dangerous flaw. It is true that developed economies live on credit, but this is not necessarily a bad thing. Debt is a quintessential growth tool. From 1960 to 2010, the combined

indebtedness of America’s households and corporations increased 37.2 times (unadjusted for inflation), whereas its G.D.P. rose 28.3 times in nominal terms and 73.4 million jobs were created. I argue that the modern financial system is the best thing that can be invented globally today. This is evidenced by the fact that today’s economy lacks anything remotely similar to the crises of 1907–1908, 1929–1932 or 1973– 1974. The existing financial system allows inflation of huge bubbles of fictitious assets, whose

devaluation does not ruin the real economy simply because the money shown on account statements never actually existed in the first place. Creation of this unsecured money supply supports consumption and encourages development of manufacturing, while the international imbalances that arise open up new prospects for emerging economies. Bear in mind that the countries that issue the reserve currencies virtually cannot default on their obligations because they have promised to pay investors back

RUSSIA’S ECONOMY READY TO LEAP FORWARD Felix Goryunov SPECIAL TO RBTH

report released in August by the International Monetary Fund bears the intimidating title: “Russia Needs Deep Reforms to Maximize Its Growth Potential.” The fund projects that Russia’s G.D.P. will grow 4.5 percent in 2012 a n d 3 . 9 p e rc e n t i n 2 0 1 3 , assuming that oil prices remain stable and the government takes steps to reduce its dependence on natural resource exports and attract foreign investment. Even so, compared with the neardepression state of the economies of developed countries and slowdowns in China, India and Brazil,

Russia is a bright spot on the gloomy world economic scene. However, it seems that PresidentVladimir Putin does not find much to celebrate in his country’s economic situation. The trauma of Russia’s rapid transition from boom to bust in 2008–2009 is still fresh, and the protests of the last six months have shown the failure of post-Soviet Russia’s social and economic policies in a new light. Putin has demonstrated that he is serious about changing the country’s economic direction by naming Sergei Glazev as his economic adviser. Glazev, a renowned politician and economist, is a determined opponent of the neoliberal ideology and practices that have been prevalent in Russia in the last 20 years. Glazev asserts

that these policies have made the country a natural resources colony of the West, resulted in a trillion-dollar loss of capital and blocked the creation of the kind

Vladimir Putin has demonstrated that he is serious about changing the country’s economic direction. of sound banking and investment system needed for funding diversification and renovation. In Glazev’s opinion, Putin has set a course for restoring Russia’s economic sovereignty by creating economic development agencies and

state corporations and by restoring state control over oil and gas revenues, along with other measures for stimulating investment and innovation. The unfolding global economic crisis, Glazev believes, presents a challenge and a chance for Russia not only to escape dire consequences of the global crisis, but even jump on the wagon of a new tech-driven future. Its core clusters are the nano-, bio-, information and communication technologies that in a matter of three to five years are likely to become the major drivers of the global economy. Russia’s economic success depends on how fast it can activate its potential and develop these industries. In an article entitled “How to Saddle the Wave,”

with more of the same currency units they print. And should investors wish to exchange their money for assets located in those countries, prices will rise and balance will be restored. If an attempt is made to regulate the money supply on a global scale, the world economy will return to living within its means. Consumption in the U.S. and Europe will shrink by at least the amount of their trade deficits — by $1 trillion annually. The economy will contract by 4–5 percent a year for several years in a row.

published in Russian daily Nezavisimaya Gazeta, Glazev pointed out the need to concentrate the efforts of the national finance and investment systems and apply state administrative and legislative leverage to the creation of core clusters for the new technological mode. Despite its currently underdeveloped economic potential and the threats of oncoming global crisis, Glazev writes that Russia is in a position to accept this challenge. A system of strategic planning of diversi-

Russia’s state-oligarchy capitalism possesses the potential for a leap forward in technological development. fication and innovation and their coherent governance will not only ensure the country’s economic survival; it will create prerequisites for a Russian economic miracle and not less than 8 percent annual growth.

FIXING CORRUPTION AN EASY TASK Valery Fedotov VZGLYAD NEWSPAPER

ussian bloggers are again engaged in a fierce discussion on how to beat corruption. The main consensus is that the situation is hopeless. Bribes have been taken since time immemorial, and if businessmen did not bribe officials, there would be no corruption, so they have only themselves to blame. In my opinion, this is utter rubbish. Overcoming corruption in Russia is realistic and even fairly easy — given the will. All it takes is to introduce a small change in the law: to remove culpability from the bribe-giver if

he cooperates with the investigation and gives an honest account of all the details of the crime.Then the problem will start to take care of itself right before our very eyes. At present, corrupt officials are protected by guaranteed mutual liability. They can demand any kind of sum from you, but if you go and tell the police, then you can be jailed for being an accessory. So you have to pay up and keep your mouth shut. If, on the other hand, giving a bribe ceases to be a crime, many businessmen who have paid the required kickbacks would gladly report the incident to the authorities. This is because few of them pay these bribes of their own accord. Most are victims of extor-

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tion. Once they succumb, they are guilty of bribe-giving. The person who takes the bribe and the person who gives the bribe are in very unequal positions. The former has his official status, wields great power and has the entire state machine behind him. The latter just wants to get rid of the problems created by the former. While the former benefits from the crime, the latter has to part with his hardearned money. How can they be on the same footing? Yet the law treats them the same. The experience of other countries shows that the introduction of such legal principles can be very effective. Organized crime was rampant in the United States

in the middle of the 20th century. American law enforcers were well aware of the problem, but could do nothing about it because the mafia was hardly likely to lynch their own. However, after

A bribe-taker and a bribe-giver are in very unequal positions, but the law treats them the same. the 1970 Organized Crime Control Act decriminalized the actions of mobsters who testified against their fellow criminals, the situation quickly improved. At

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present, the mafia in the U.S. has been almost completely destroyed, or at the very least has been driven deep underground. The problem has practically been solved. The experience of Hong Kong is even more relevant to Russia. In 1974, people who called a special hotline to report acts of corruption were absolved of any responsibility in the crime, even if the caller was himself implicated. The Hong Kong government also stopped considering corruption due to causes beyond the person’s control a crime. This category would include, for example, a businessman who has to bribe an official to get a permit to start his business. By that time, 94 percent of the government sector was

Capital markets will lose more than half their valuation and commodity prices will fall by between a half and three-quarters. Governments will no longer be able to support their companies with the ease they do now. Throughout the 2000s, a period of the greatest imbalances and hardest financial shocks, emerging economies were growing at an average annual rate of 6.2 percent compared to 2.1 percent in developed countries. During that period, the combined value of commodities bought annually by the first world from resourcebased economies rose from $400 billion to $2.1 trillion. Developed countries themselves created fewer than 10 million jobs, while emerging economies created more than 230 million. The financial shocks caused no losses to bank depositors in developed countries, unlike what happened in the early 1930s. Additionally, their G.D.P.s and the level of consumption did not decline. The unfair and unmanageable financial system that took shape after 1971 has, in effect, helped developing countries rise industrially and allowed developed countries to maintain their growth rates and become hubs for technological innovation. Also consider this: failures and problems haunted mainly those countries that tried to make their currencies quasi-convertible and to peg them to the U.S. dollar — be it Asia in 1997, Russia in 1998 or Argentina in 2001. Freedom to manuever is worth more in the modern world than any advantages of stability. However unfair the existing financial system might seem, any alternative to it would be less efficient. Whichever way you look at it, the economy is a system based on efficiency and not on fairness. And whenever anybody tries to destroy it for the sake of contrived ideas, efficiency tends to evaporate but fairness never arises. Vladislav Inozemtsev is director of the Center for Post-Industrial Studies.

Glazev’s ambitious proposals have little in common with the deep reforms suggested by the I.M.F. And his ideas are hardly shared by those in the Russian government and business elite who are happy with the existing order of things. So it rests mostly with Putin and his men to accept or reject Glazev’s road map. But here it is worth remembering that the countries that rode high on the last technological wave—Japan, South Korea and later China—benefitted from both government sponsorship and heavy investment by private businesses. Despite all its drawbacks, the Russian state-oligarchy capitalism has similar opportunities for a miracle economic performance—it possesses the institutional and intellectual potential for a leap forward in technological development. The global economic situation that aggravates Russia’s dependence on world markets makes such development a matter of economic survival. Felix Goryunov is a Moscowbased economic journalist.

riddled with corruption, according to independent research. Today, Hong Kong ranks 12th among the world’s least corrupt countries, ahead of Japan, Germany and the U.K. I am convinced that these measures would prove equally effective in Russia. If a person who has given a bribe can safely report the fact to the police, then corrupt officials will tremble with fear, for the next knock on the door just might the authorities catching up with them. And before we know it, talk of gratitude and interest on the part of officials will fade out. It is stupid to say that nothing depends on us and that some fundamental problems cannot be solved. This is the path of losers. Any problem can be solved, given the political will. Valery Fedotov is a member of the United Russia party.

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Culture

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Opera For the second year in a row, the Met will open its season with Anna Netrebko

THEATER PLUS

More Than Glamour to Russia’s Diva in Jeans

Today’s Theater News Is Tomorrow’s Oblivion

One of opera’s most recognized faces — and voices — Anna Netrebko knows that there is nothing glamorous about the hard work required for success in the theater and at home. AYANO HODOUCHI RUSSIA BEYOND THE HEADLINES

ITAR-TASS (2)

NICK HEAVICAN/METROPOLITAN OPERA

HER STORY NATIONALITY: RUSSIAN CITIZENSHIP: AUSTRIAN AGE: 41

Born in Krasnodar, Anna Netrebko moved to St. Petersburg as a teenager to study at the conservatory there. She made her operatic debut at the Mariinsky at the age of 22, singing the role of Susanna in “Le Nozze di Figaro” with the Kirov Op-

ly in English, and her son, Tiago, is picking up three languages — Spanish from his Uruguayan father, the baritone Erwin Schrott; Russian from his mother; and English from New York, where the family lives. “We’ll stay here for several years. I want Tiago to study here,”Netrebko said.“Here

After “L’Elisir d’Amore,” Netrebko will take to the road doing concert performances. there’s so much to do — swimming pool right in the building, special fitness clubs and so on. I travel all the time and sometimes have to leave him because of school. It’s a torture for me. But if I know he’s busy all day doing interesting things, I’m calmer. In Vienna he would just see his nanny all day, maybe another nanny sometimes. It’s not good.” Being a mother has made life

era. Known for her interpretation of Russian dramatic roles, such as Natasha in “War and Peace” and Lyudmila in “Ruslan and Lyudmila,” Netrebko is in demand as a performer and has appeared on the stages of the world’s leading opera houses — including Covent Garden and La Scala. She has a son with her fiancé, Uruguyan baritone Erwin Schrott. The family splits its time between Vienna and New York.

very difficult, she continued in a lower voice. Always torn between family and career, she said she understands the decision of some singers never to have children“because to have a kid means so many problems, so much money to spend — so much, it’s unbelievable.”You have to work hard to keep a balance, “because life gave me so much, I cannot just say, I’m finished with my career, now I’m doing my family. I think I will be punished if I do that.” Now 41, her versatile and light voice has shifted in recent years, and she is making a foray into more spinto repertoire, which demands a slightly heavier, more dramatic voice. Next season, she will star in the Met’s new production of “Evgeny Onegin” as Tatiana, a suggestion made by Peter Gelb, the theater’s general manager. After that, she has plans for Leonora (“Il Trovatore”), Manon (“Manon Lescaut”) and even Wagner–Elsa in“Lohengrin,” which she said is one of her dreams. She’s also recording a CD

KOMMERSANT

Almost a decade ago, Anna Netrebko sang at Maly Zal as part of the first Moscow Easter Festival. She was already a much-talked-about starlet then: lithe and charming on stage. But today, she is a familiar face on billboards all over the world and a name that guarantees a sold-out show. Like many hardworking stars confident and balanced in their popularity and success, her manner is unaffected, gracious and straightforward. She doesn’t have to prove anything to anyone, or pretend to be what she’s not — she is Anna Netrebko. She seems to have it all — popularity and support back in her homeland Russia, despite infrequent performances there. She obtained Austrian citizenship several years ago (to make traveling easier), and enjoys a solid base at the venerable Wiener Staatsoper. Most important, she is now the face of the Metropolitan Opera. This month, she opens the season in the role of Giannetta in Donizetti’s comic opera “L’Elisir d’Amore,”her 13th production at the theater since her debut in 2002. Last season also opened with Netrebko, in the title role of Anna Bolena. “I know there is a certain image about me,” she said, and indeed she’s not the typical opera singer, photographed beautifully in floor-length gowns. Gracing the pages of glossy magazines such as Vogue, her photos don’t differ much from those of a fashion model or actress, wearing everything from jeans to haute couture. “But we didn’t create this ‘diva in jeans’ just because it sells. It happened naturally. I was very young when all this started, and I love glamorous photo shoots… I didn’t see anything bad in that; I had some endorsement deals, also cool. Why not? Somehow, it all happened: this glamour stuff, Chopard and everything.” She evidently relishes all that comes with being a celebrity, but she has always resisted going into pop music, although she knows it’s “cool” and would make her even more glamorous. “Just not my thing,”she said, although she did do a song with Russian pop star Philipp Kirkorov last year. “Dima Hvorostovky gave him my number and so he called me and I said, ‘O.K., send me the song.’ And I listened to it and actually liked it. And I mean, it doesn’t cost me anything — one hour in a studio, that’s it.” Making the music videos and getting awarded was fun, she said, but, dropping into Russian, added,“These pop singers, they all lip synch!” She speaks volubly and fluent-

1. Opening the 2012 Met season as Adina in “L’Elisir d’Amore.” 2. Performing as Violetta in Giuseppe Verdi’s “La Traviata.” 3. As Mimi in Giacomo Puccini’s “La Boheme.” 4. Solo concert at the Mariinsky.

of Verdi arias with Gianandrea Noseda in Torino, and sang Lady Macbeth — a very dramatic, heavy soprano role sometimes even sung by mezzo sopranos. After “L’Elisir d’Amore” at the Met, she will take to the road doing concert performances of Tchaikovsky’s“Iolanta,”an opera little known outside Russia, which she hopes people will like, although it may not be the kind of flashy gala concerts her fans are used to. Audiences outside New York can see Netrebko perform in “L’Elisir d’Amore” via the Met’s “Live in HD” broadcasts, which screen in movie theaters around the world. The live broadcast will be on Oct. 13, but the performance will appear in reruns for several weeks after that.

Real Estate Moscow’s oldest hotel, the Metropol, has been sold to the Azimut chain

History to the Highest Bidder Moscow’s oldest hotel, the storied Metropol, went to the highest bidder in a recent auction. The change of ownership, however, does nothing to change the hotel’s history. DARIA GONZALES

The imposing façade of the Metropol Hotel, a stone’s throw away from the Bolshoi Theater, is encircled by a quotation from Friedrich Nietzsche: “And then again, the same old story! When we have finished building our house, we suddenly notice that we have learned something in the p r o c e s s .” T h e f i v e - s t a r, 424,000-square-foot complex features 362 rooms and is one of the most significant architectural landmarks of the modern era. Recent guests of the hotel have included King of Spain Juan Carlos I, late Korean leader Kim Jong-il, Chinese Prime Minister Hu Jintao and Sharon Stone. During its heyday in the mid-20th century, the hotel accommodated equally distinguished guests such as Bertolt Brecht, George Bernard

ALAMY/LEGION MEDIA

RUSSIA BEYOND THE HEADLINES

The Metropol has housed some of the 20th century’s biggest names.

Shaw, Mao Zedong and John Steinbeck. Nevertheless, there was barely any haggling to be seen when the Moscow authorities sold the hotel for $275.6 million to Alexander Klyachin, owner of the Azimut Hotel chain. Construction on the Metropol began in 1889, and it took sixand-a-half years to build. It stood

out not only for the originality of its design, but also for its stateof-the-art facilities, including hot water, refrigerators and special ventilation systems. In the early 20th century, the Metropol’s many restaurants were frequented by celebrity actors, as well as composer Sergei Rachmaninoff. The Boyarski restaurant was Raspu-

tin’s favorite place to dine and go on his famous binges. In 1918, after the Soviet government moved to Moscow, the hotel turned into a residence of the new regime, and Nietzsche’s quote was extended to includeVladimir Lenin’s words:“Only the dictatorship of the proletariat is capable of liberating mankind from the pressure of capital.” Unlike the original inscription, this phrase is still clearly visible. In the late 1920s, the Metropol again became a world-class hotel. Legend has it that SergeiYesenin fell to his knees and first professed his love for Isadora Duncan in the lobby of the Metropol. In 1993, Michael Jackson stayed in the hotel and offered to buy a lamp with a bear-shaped handle. The hotel boasts more than 800 antique items, and some of them have alarm systems attached, just like museum exhibits. The new owner will be responsible for preserving the cultural legacy of the hotel. Klyachin may own the the building itself, but the furniture and paintings will remain in ownership of the state.

John Freedman THE MOSCOW TIMES

nton Chekhov is the one who put it on paper in its simplest form and, thus, made it something of a cliché: theater needs new forms. In “The Seagull,” the young Treplev utters a phrase to that effect as he prepares to show his family and friends a play he wrote. It’s a weird little drama that makes his mother, the famous provincial actress Arkadina, mockingly mutter something about decadence. But the notion that theater cannot survive without change is eternal, and it has been possible to hear Treplev’s words about “new forms”uttered in every new age since Chekhov wrote “The Seagull” in 1896. In the second decade of the 21st century, we are living through an era when the search for new languages, new approaches and a new aesthetic is particularly intense. There is nothing new about being new, however. I recently picked up a little booklet published in 1924 called “On How the Sexton Got in Trouble, or, On How Peasants Can Get Water for Their Plowed Field.” It is a short play written to be performed by peasants in post-revolutionary Russia in the fields or, perhaps, in barns. Chances are there had never been theater in the fields and barns of Russia’s farms before this time. If there had been, it certainly was not done like this. RedVirgin Soil publishers put out a whole series of booklets that were intended to help the government bring theater and new ideas to the people.The final page lists other plays available and concludes with the information that these publications may be purchased in “all bookstores and in railway stations.” I guess someone assumed, or, perhaps, hoped, that peasants heading out to the fields by train would pick these little books up and start planning theater sea-

sons to go along with their harvest seasons. Most intriguing of all is a small article at the end of the book,“How to Perform the Play.”This essay by Leonid Subbotin, who wrote the play with Vladimir Mass, is — if we hold our tongues in our cheeks for awhile — a treasure trove of methods for seeking“new forms.” “The main thing while working on this play,”Subbotin declares flatly, “is not to be embarrassed. That’s the main thing. If what needs to be done is clear, then do it boldly. If it’s not clear, it’s absolutely pointless to shout and wave your hands.” Is this the Stanislavsky method condensed into two phrases? Subbotin continues:“You must

We are living in an era when the search for new languages, approaches and a new aesthetic is particularly intense. understand the meaning of every word and pronounce each word faithfully. This is called ‘finding the proper intonation.’” Finally, the author concludes, “Besides the characters’ clear pronunciation and behavior, their actions must also be clear, expressive and understood by the spectator.You must avoid frequent, small, incomplete actions. Let’s take the scene where the angry peasants attack Alexei. This should not be done in a way that chaos reigns on stage. The task on stage is not to attack Alexei, but to show how he was attacked. Spectators love seeing action on stage.When people’s thoughts and emotions on stage are transformed into action and movement — that is theater.” Subbotin and Mass wrote at least six such playlets together, all addressed to peasants, as did numerous others, whose full names cannot always be ascertained — A.S. Abramov, Kutin, Nikiforov, which nobody now remembers. It makes you wonder: What will happen to the innovative theater we rush to see today?

BIBLIOPHILE

Russian Prince Who Planted Seeds of Modern Fiction Phoebe Taplin SPECIAL TO RBTH

TITLE: TWO DAYS IN THE LIFE OF THE TERRESTRIAL GLOBE AND OTHER STORIES AUTHOR: VLADIMIR ODOEVSKY PUBLISHER: ONEWORLD CLASSICS

ublishing a book of early 19th-century short stories by an aristocratic Russian polymath may seem a strange decision at first glance, but this collection showcases Vladimir Odoevsky’s versatile skill as a storyteller. It includes ghost stories and thrillers, biographical studies and satires. “The Little Town in the Snuff Box”represents Odoevsky’s tales for children, while the title story about an approaching comet engagingly combines a mini comedy-of-manners with proto–science fiction. This bewildering range of embryonic genres is clearly meant to demonstrate the author’s wide-ranging importance in literary history. A century before Yevgeny Zamyatin’s “We” laid the foundations of the dystopian tradition, here is a fable that (briefly) envisages an apocalyptic scenario with global implications. The people of earth lament, “their pale faces … illuminated by a crimson flame.” Odoevsky can also do pre-Dostoevskian psychodramas of guilt and confession, or semi-Tolstoyan social tales. Comparisons are not confined to Russian authors. He shares motifs with a range of past and future writers, especially the Romantics; his status as“the Russian Hoffman,” after the German author whose novellas

provided plots for ballets like“The Nutcracker,” is reinforced by his interests in philosophy and music. Professor Neil Cornwell, who translated and introduced these stories, is a specialist in Odoevsky’s work; one of his more recent comparative studies argues that Odoevsky’s stories are pathways into various genres of modern fiction. This appealing concept is strengthened by the fact that Odoevsky personally knew the giants of Russian literature including Leo Tolstoy, Fyodor Dostoevsky and Alexander Pushkin. Odoevsky was a prince, senator, scientist, educationalist and critic. He curated a major museum and what is now the Russian State Library. Reading these diverse stories provides a glimpse of his Faustian universe. The problem with setting up such grand expectations is that the stories themselves are occasionally disappointing. Moments of psychological insight are diluted by erratic narratives. The children’s story of a town inside a musical snuff box, representing Odoevsky’s most enduringly popular genre, seems particularly bland. The“Alice in Wonderland” delight of magical childhood discoveries is tempered by intrusively didactic elements about perspective and mechanics. A winding, satirical tale called “The Black Glove” starts very promisingly with a man whose trip to England leads to dogmatic, Benthamite ideas of practicality, “incomprehensible to a Russian person,” but loses its way a little in the third generation of characters. These minor quibbles do not detract, however, from Odoevsky’s achievement. The translator and publisher have done Western readers a service in rescuing this important writer from obscurity.

Feature

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Education Russian university hopes to take on the world’s leading institutions of higher education with help from M.I.T.

Looking for the Best and Brightest Skolkovo Institute of Science and Technology opens with an inaugural class of 21 carefully selected graduate students hailing from 14 Russian regions.

THE QUOTE

Bram Caplan

EKATERINA ZABROVSKAYA

DIRECTOR OF STUDENTS, SKOLKOVO INSTITUTE OF SCIENCE AND TECHNOLOGY

RBTH

As I look at this first group of students, I feel that Skolkovo Tech is really starting to feel like a university. With the development of our research centers and the continued progress in establishing the Center for Entrepreneurship and Innovation, these students have the opportunities to excel.

Michael McFaul AMBASSADOR OF THE UNITED STATES OF AMERICA TO THE RUSSIAN FEDERATION

If you put yourself into a new environment, it suddenly can change your horizons. You are going to meet new people. You are going to be exposed into new ideas. That’s going to create new networks.

PRESS PHOTO

As the new school year gets underway, one of Russia’s newest universities, the Skolkovo Institute of Science and Technology (SkTech) is welcoming its first class. The school, affiliated with the Skolkovo Innovation Center outside Moscow and created in partnership with the Massachusetts Institute of Technology (M.I.T.) hopes to become one of the world’s great research universities. Around 200 young people applied to become members of the first class in SkTech’s three-year Master’s program. Forty-one finalists from 15 Russian regions were invited to Skolkovo to participate in a selection weekend in May. For three days, students were divided into small groups and evaluated by Skolkovo Tech senior staff, founding faculty fellows and M.I.T. alumni. The students were scored on interpersonal, technical and leadership skills, as well as their creativity. “There were a lot of interesting assignments,” said Bogdan Uzbekov, who received his Bachelor’s degree in applied mathematics and physics from Moscow Institute of Physics and Technology.“For example, we engineered wind turbines that produced electricity. Then, we took measurements of which wind turbine had produced higher voltage. We also discussed some philosophical problems like the influence of social networks on society and experiments on animals.” The Students’ English language skills were also evaluated through Toefl exams and during group exercises. At the end, 21 students from 14 different regions were admitted into the inaugural class. “The students were a fabulous group of first-year applicants who exceeded our expectations in

Before leaving for a month-long stay at M.I.T., SkTech students met with U.S. Ambassador Michael McFaul.

SkTech, created in partnership with M.I.T., hopes to become one of the world’s great research universities. “I want to have my own start-up... create something new,” said SkTech student Vyacheslav Sabirov.

their technical knowledge, creativity, and sincere passion to make an impact in the world,” said SkTech director of students Bram Caplan. The university’s president, Edward Crawley, added that this first class of students,“will have a unique opportunity to install lasting impact at Skolkovo Tech. Most importantly, they will be the class that shapes the culture and curriculum for years to come.” The program began in August at M.I.T. with a four-week innovation workshop focused on technological innovation and teambased project work. Afterwards, in September, the students began a year of study at one of several world’s leading universities: Imperial College of London, Hong Kong University of Science and Technology, M.I.T., or the Swiss

THE NUMBERS

22 76% 9% is the average age of the members of SkTech’s first class of graduate students.

of those selected for the M.I.T.-Skolkovo program are male, while 24% are female.

Federal Institute of Technology in Zurich. They will spend their last two years in Skolkovo. “When we return to Skolkovo, we will be working in close collaboration with leading companies who, as expected, will give us sponsorship and involve in their projects,” said Marina Morozova, a St. Petersburg State University graduate who will be

of those admitted into the first class at SkTech already hold a Master’s degree.

focusing on I.T. at SkTech. While some students have only vague ideas of what they would want to do with this education, others already have specific projects in mind. For example, Vyacheslav Sabirov, who received his degree in multichannel telecommunication systems from Moscow Institute of Electronic Technology, said that he wants

to engineer a radically new type of telephone.“I would want to have my own start-up,” he said. “I want to create something really new. I expect we will be encouraged to do this in Skolkovo.” The U.S. Ambassador to Russia, Michael McFaul, who met with the students before their departure for M.I.T., predicted an exciting future for the first Skolkovo Tech class: “If you put yourself into a new environment, it suddenly can change your horizons.You are going to meet new people. You are going to be exposed into new ideas. That’s going to create new networks.” Said SkTech student Dmitry Vasilyev, who will study energy science,“I have very high expectations for this program. The start has already been extremely interesting.”

QUESTIONS & ANSWERS

At this year’s prestigious Venice Architecture Biennale, which opened Aug. 29, Russia is represented exclusively by a team from Skolkovo, the country’s futuristic city-in-progress. Elena Shipilova of Russia Beyond the Headlines spoke to Grigory Revzin, member of Skolkovo’s architecture-planning council, about what Skolkovo hopes to achieve at the exhibition. This year’s Venice Architecture Biennale kicked off Aug. 29. What is Russia showcasing? This year we will present the Skolkovo Innovation Center project. The display is truly amazing — our architects were trying to create a space that would balance between the physical and the virtual. We have never had such a sophisticated project before. The pavilion has two stories. The ground floor showcases a Soviet phenomenon — closed science towns that were inaccessible to ordinary citizens. The visitors not only get a glimpse of the past, but also see a life that very few people lived in the Soviet Union. On the second floor, they see the modern, accessible Skolkovo Innovation City, as if contrasted to the Communist secrecy of closed towns. Which projects and architects competed for the right to represent Russia this year?

The Ministry of Culture believes there should always be some large, national-scale project to represent Russia at theVenice Biennale. For instance, in 2004, when the reconstruction of the Bolshoi Theater and the Mariinsky Theater was launched, we presented the display “Two Theaters.” Although the Biennale is a modern arts exhibition and architectural monuments are, as a rule, not allowed there, the reconstruction project gave us that rare opportunity. The problem is that there are few nationwide projects that can compete at the exhibition — Sochi-2014, Russky Island, Greater Moscow, reconstruction of central St. Petersburg and Skolkovo. The Innovation City has brought together Russian and foreign professionals, and we thought it would be exciting to make use of this blend. Why are most national projects carried out by foreign architects? Take Skolkovo, where the infrastructure is being developed by Japanese, Swiss and French firms. Are there no good Russian specialists? Russian architects were“fed”exclusively by the former mayor of Moscow,Yury Luzhkov. Our federal authorities have always opted for Western specialists. I am always telling them that we have talented architects, but they say: No thanks, we have not heard of any of them. For instance,

when [former president] Dmitry Medvedev chaired the guardianship board of the Pushkin Museum in 2009, he wanted to assign the reconstruction of the museum to the British architect Norman Foster, simply because he knew the name. I tried to explain to him that Foster is just a brand under which other people work, that the maestro spends just about seven minutes a year on each of his projects! Why encourage this approach? But I did not manage to change his mind. I became a member of the Skolkovo Foundation city planning council because I wrote an article about engagement of foreigners in the project, even though such projects should be used to promote the national architecture school. The situation enraged me — as if Russian citizens were not allowed to vote for their own president! As a result, they proposed that I hold a tender among Russian architects. Boris Bernaskoni has almost completed the first Skolkovo building, the Hypercube; the SPEECH Bureau of Choban and Kuznetsov is designing the D1 district; Grigorian’s Meganom Bureau is working on the D4 district; and numerous young Russian architects have been awarded contracts to develop residential quarters. Incidentally, this is another reason why I wanted to showcase Skolkovo at the Biennale.

PRESS PHOTO

Skolkovo Represents Russia at Venice Biennale

Russia’s pavilion, entitled “i-city,” was designed by a team from the Skolkovo Innovation Center.

Russia Takes Jury Prize at Biennale For the first time in the history of the Venice International Architecture Biennale, which has been held every other year since 1980, the Russian pavilion has won a prize from the competition jury. The pavilion, entitled “i-city,” was awarded a special mention. The Russian entry was designed by a team from Skolkovo, the science and innovation center outside Moscow.

“We feel proud and we are happy with the work done, looking forward for further successful participation in architectural competitions of such a high level,” said Skolkovo Foundation President Viktor Vekselberg, as quoted by the press service. The theme of this year’s exhibition, which will run until Nov. 25, is “Common Ground.” RIA Novosti

You are sometimes very critical of how the state approaches architectural projects. Why? We tend to do many things halfheartedly. There is not enough consistency and accuracy, so many excellent initiatives get corrupted. They decided at the economic forum in St. Petersburg that $1 billion of budget funds would be allocated annually during the coming decade in order to recon-

struct the city center. This is good money, but I am afraid it will not do the city any good. There is another difficult situation in St Petersburg, surrounding the Gazprom tower. Economically, it is a crucial thing for the city: you would have to be a fool to use such an attractive project to cause trouble between the municipal authorities and residents. Alexei Miller, the Gazprom

C.E.O. and a very intelligent man, had the idea that the 300-meter skyscraper would represent his company most adequately in the low-rise northern capital. They had him change his mind and shift the construction site, but at what cost? St. Petersburg was in danger of losing its status as a Unesco world heritagesitebecauseoftheGazprom tower, wasn’t it? That was not the worst problem. The Moscow Kremlin almost lost this status many times, for example, after the Palace of Congresses was built there, yet it did not suffer much. What is worse is that we often consciously destroy our historic legacy, allowing our buildings and city layouts to be ruined. We should not use Unesco as a bogeyman all the time. We need to deal with our problems independently. Prepared by Elena Shipilova

Exploring the Orthodox Work Ethic October 17