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WEDNESDAY, OCTOBER 17, 2012

NEWS IN BRIEF

Space Russian space agency Roskosmos has ambitious plans, but reforms are needed to carry them out

Fly Me to the Moon ... and Mars, Jupiter and Venus

Growth Forecast Lowered In its latest Russian Economic Report, the World Bank lowered its 2012 G.D.P. growth forecast for Russia to 3.5 percent, from the 3.8 precent it was predicting in June. The World Bank also lowered its 2013 growth forecast for Russia, to 3.6 percent from 4.2 percent. In justifying the decision, the Bank said: “Just at a time when Russia’s output level exceeded the 2008 pre-crisis highs, the economy appears to be setting on the course of low growth. Russia’s economy performed well in the first half of 2012. However, the economy is slowing down due to rising inflation, weakening domestic demand and sluggish external demand.”

After a year of disappointments, Roskosmos hopes a renewed focus on R&D and efficiency will allow it to carry out an ambitious program of discovery. ANDREI KISLYAKOV RUSSIA BEYOND THE HEADLINES

Second Phase of Nord Stream Pipeline Opens

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Prime Minister Dmitry Medvedev met again in early October with top officials from Russian space agency Roskosmos and directors of major Russian space enterprises to discuss how to turn around the national space industry following a series of high-profile accidents in 2011–2012. The industry suffered its latest major setback on Aug. 6, when the Russian communications satellite Express-MD2 and Indonesia’s Telkom 3 were lost because of a booster rocket malfunction. Roskosmos reacted to the series of accidents by proposing a sweeping reform of the industry, consolidating the current 15 structures into seven in an attempt to eliminate the duplication of development and production functions and make the industry more efficient. Experts admit that the success or failure of the reform will determine whether Roskosmos is able to fulfill the ambitious plans described in its strategy for developing space activities up to 2030, which was presented in April. The document includes such bold ideas as sending manned flights to the Moon, deploying stations on Mars and exploring Venus and Jupiter. Roskosmos also announced plans to close 15 programs aimed at exploring the planets and focus instead on the Arktika project, which involves launching several satellites to monitor Arctic territories.

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One of the space industry’s main problems is financing. Russia’s investment in space research and development is less than a tenth of that in the United States and Europe. According to Major General (ret.) Vladimir Dvorkin, who headed a Defense Ministry research institute, the lack of investment shows. “More than 70 percent of tech-

nologies that meet production needs are worn out and outdated. More than half of the machine tools are past their service lifespan. The average age of employees at defense-industry research institutes is almost 60,”said Dvorkin.“What we should be doing is making an effort on the technological front and launching a modest probe towards the moon.

A rocket takes off from the Baikonur Cosmodrome in Kazakhstan, which is the the main launch site for Russian space vehicles and satellites.

And on the political front, we should be developing private space exploration based on the American model. But if we continue to inflate managerial staff, lure space tourists and try to impress the world with mythical space programs, then the Russian space industry will fall hopelessly behind — no matter how many meetings are held.”

The second branch of the Nord Stream pipeline, which directly connects Russia’s gas pipeline system to Europe’s via the Baltic Sea, began operation on Oct. 8. With the second branch’s opening, the trunk gas pipeline can now supply up to 55 billion cubic meters of gas for at least 50 years. The main Portovaya Compressor Station, in the Russian city of Vyborg near the Finnish border, can create a sufficient amount of pressure to transport gas without intermediary compression stations along the 760 miles from Russia’s Baltic coast to the German port city of Lubmin.

Putin Calls for Development At the recent Russia Calling investment forum in Moscow, President Vladimir Putin declared that the country has exhausted its supply of “simple solutions”for ensuring economic expansion, saying that further growth is only possible by creating new production, modernizing production units and developing human assets. Putin said the Russian authorities must provide a framework for creating and developing new sectors of the economy and promised to take a few steps in this direction, including amending the tax code and reforming the pension system.

Architecture The innovation city gets its first building, a futuristic, environmentally friendly box

Skolkovo’s Future is Cubed In Polish director Andrzej Sekuła’s thriller “Hypercube,” the main characters of the film are trapped inside the cubeshaped construction of a mysterious genius. The cube building is actually made up of cube-shaped cells with unique properties: some rooms make time run faster; some distort space. Those inside the cube must escape the building as soon as possible, but not everyone is so lucky. Although architect Boris Bernaskoni may have had Sekuła’s film in mind when he designed the first building for the Skolkovo Innovation Center outside Moscow, the building itself is far more welcoming — and hopefully a place its residents will want to stay. The flagship building of Skolkovo, it features deliberately ascetic interiors and exteri-

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Office of the future: the innovative and eco-friendly hypercube is the flagship building of the Skolkovo Innovation Center.

ors stuffed with an ambitious concentration of innovative, high-tech solutions per square foot. The Skolkovo hypercube follows the 4E principle of architectural design and construction, which stands for economical, ecological, ergonomic and energy-efficient operation. A key

feature of the building is its virtually autonomous communications system. The only connection from the building to the outside world is a power line, and even this is only partially necessary. Solar cell batteries are installed on one side of the hypercube, but given Moscow’s lat-

CONTINUED ON PAGE 8

ELENA POTAPOVA

ALEXANDER VOSTROV

itude, they do not generate enough power for the entire building. There are no conventional radiators to be found on the premises, and heating is provided by heat pump units that use ground energy. Water supply is also unconventional: water is pumped from an artesian well, and wastewater is treated for use in landscaped areas. Huge windows in the hypercube enable occupants to use as much natural light as possible, with light conductors allowing sunrays into the centrally located rooms. Normally, large windows are not used in Russia because they leak heat, but special heat convectors in the hypercube create an air curtain that keeps the temperature in the building stable. Waste is also recycled in the building and transformed into gas. Finally, the front of the building is also multifunctional. Besides being attractive, the hypercube’s stainless-steel mesh front turns the building into a giant screen for displaying images, presentations and messages.

Russian Civil Society Finds a New Life Online RBTH.RU/18863

For months, visitors to the site of Russia’s much-hyped innovation center outside Moscow saw nothing but a field; soon, all that will change.

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Big city For many Russians outside the capital, the most attractive roads no longer all lead to Moscow Moscow Assesses Its Image Problem

Russians still consider Moscow to be the most attractive city for education and business; yet, the capital is beginning to lose its appeal across the board. PAVEL NIKULIN SPECIAL TO RBTH

Residents of Russia’s regions consider Moscow the best place to get an education, but an unsuitable place to raise children. They also see Moscow as the best place to get ahead in business, but not

a city that is good for your health. These are just some of the findings from a recent poll conducted by sociologists at the All-Russian Public Opinion Research Center (VTsIOM). According to VTsIOM, nearly half of all Russians accept that Moscow offers better opportunities for obtaining a good education (49 percent) and a decent standard of living (47 percent), as well as for finding a good job (46 percent) or getting a position in government (54

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A Nice Place to Visit, But Who Wants to Live There? percent), but at the same time an overwhelming majority of Russian residents (82 percent) believe that the capital prospers at the expense of the regions. Moreover, two-thirds of all respondents were convinced that tension exists between Muscovites and residents of other cities and regions in Russia (68 percent). This latest poll also indicates that, for the most part, the capital is not a city in which Russians would like to live permanently or build a family.

Zhanna Khlopina, a psychotherapist in the southern Russian city of Krasnodar, is convinced that Moscow is an expensive city and far too overcrowded. According to Khlopina, it is impossible to start a business there without a substantial amount of investment capital.“I do not consider Moscow ecological,”said Khlopina,“and I’m convinced that the social and medical services there do not work the way they should, because of the overcrowding.” She would consider living in Moscow only as a temporary measure, in order to earn money. “Moscow can give you a quality education, but I would not get married or bring up a child there. I might live there for certain

The Ministry for Economic Development has decided to ask for outside help to determine how fast Moscow could improve its status as an international financial center (I.F.C.) and become an attractive destination for foreign investors. The ministry intends to announce a tender this fall for “identifying opportunities” and developing a “road map” for raising the standing of the Russian capital in international financial center rankings. Although the amount that officials are prepared to spend for this purpose has not been disclosed, experts believe it to be tens of millions of rubles. The consulting firm that wins the tender will be responsible for identifying the most important I.F.C. rankings, investigating their structure, reviewing the key assessment indicators and performing a comparative analysis, said Rostislav Kokorev, deputy director of the Ministry for Economic Development’s corporate governance department.

length of time, but I would never move there for good,” Khlopina said. She is not alone in her assessment. Over the past six years, Russians have begun to leave Moscow for regional cities in ever-greater numbers. In 2006, 60 percent of respondents believed that Moscow offers a decent standard of living, quality education and career opportunities. Since then, however, the Russian capital has begun losing its attractiveness to non-Muscovites in search of a good education, a good job, or a start in business or politics. Moreover, the capital is losing out to the regions in matters of ecology, health and personal safety. An overwhelming majority of

respondents (68 percent) said that the environment in Moscow was unhealthy and nearly half (49 percent) said it was not safe. There are several reasons for this, according to Nikolai Petropavlovsky, director of a sociological center in Krasnodar. “Many people are not in a rush to move to Moscow because of the high standard of living. People there not only earn a lot — they spend a lot, primarily on renting a place to live, on transportation and food,”Petropavlovsky said. The recent VTsIOM poll found that 39 percent of respondents were discouraged from moving to Moscow because they were certain that they could not find affordable housing in the capital. Another reason for Moscow’s declining popularity is the creation of attractive jobs in the regions. Related to this is a general feeling of disappointment among Russians regarding social mobility. “In the Soviet Union, people believed that a good education could get you a good job,” said Petropavlovsky. “People don’t believe that anymore.” People’s willingness to move to the capital is indeed decreasing, but this has not affected migration from the regions, according to Alexander Vysokovsky, a dean at the Higher School of Urban Planning.“Residents of the provinces have never had a high opinion of the capital,”Vysokovsky said.“But the stream of migrants from the regions to Moscow is still not drying up.” Despite its downsides, the capital still has more opportunities for white-collar work — while higher salaries in Moscow also give residents the ability to afford the higher costs of living. According toVysokovsky, in Moscow people can enjoy an interesting and modern lifestyle. This fact may continue to trump all of Moscow’s imperfections in the view of potential residents.

Workforce Despite positive numbers, experts see challenges ahead as firms fail to modernize and create new job opportunities

Unemployment Reaches Record Low Out-of-work Russians may face substantial challenges finding a job, even though the country’s unemployment situation is far better than in many places.

Unemployment in Russia and the West

MIKHAIL MALYKHIN VEDOMOSTI.RU

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In August, overall unemployment in Russia dropped 15.3 percent, as compared to August 2011. By early September, just under 4 million people (5.2 percent of the labor force) were looking for work, according to analysts at Rosstat. These findings were based on polls conducted by the International Labor Organization. “This represents a historic low,” said Andrei Korovkin, head of the labor resources forecasting laboratory at the Russian Academy of Sciences’ Institute of Economic Forecasting. “The previous Russian record was established in May 2008 and comprised 4,097,000 people.” Employment expert Igor Polyakov at the Center for Macroeconomic Analysis and Short-

Job seekers in Moscow face less competition and fewer opportunities.

term Forecasting remarked that an even lower figure was most likely reached in 1993, but at the time the center was having difficulties with its method of evaluation.Therefore, the August 2012 showing will be considered the record. “Unemployment simply cannot drop any lower — this is its

natural minimum,”said Korovkin. However, the analyst does not see anything good in such a low level of joblessness: “This means that companies are not rushing to modernize their production and increase their labor productivity. Consequently, in the future, the labor market may suffer a new shortage of workers.”

nual showing of 4.5–4.8 million, assuming that the fall’s seasonal increase in unemployment will not affect the yearly average. “Unemployment always goes up in the fall: if not in September, then definitely in October,” said Polyakov. He noted that employment, for example in the manufacturing sector, hardly

In Korovkin’s opinion, Russian unemployment will soon see the usual seasonal spike, but the average annual indicator will match that of the precrisis years of 2007 and 2008. His institute forecasted unemployment for 2012 at 5 million people at the beginning of the year, but it currently anticipates an average an-

grew at all this year. Meanwhile, the bad harvest in agriculture will result, in his opinion, in a seasonal drop in employment in the processing sector and in transportation. According to Polyakov’s calculations, Russian unemployment should be around 5.7 percent in the fourth quarter of 2012 and increase in the first quarter of 2013 to nearly 5.9 percent. Nonetheless, Russia’s Ministry of Labor does not anticipate any upheaval, even in the event of another global economic crisis. In order to regulate employment and provide social benefits to those people who have lost their jobs, the government plans to spend 594.7 billion rubles (some $20 billion) between 2013 and 2020. In August, the level of unemployment in the United States was 8.1 percent, while in eurozone countries, it reached another record high — 11.3 percent. The average showing for overall unemployment in the European Union was 10.4 percent.

Religion Faith traditions may not determine success, but the behavior they encourage may be more influential than previously thought

Where Getting Ahead Requires More Trust Than Initiative A cultural survey shows that Russians prefer to trust authorities rather than take risks. Economists fear these tendencies are bad for business. NADEZDHA PETROVA KOMMERSANT DENGI

PHOTOXPRESS

The natural reaction to shifting circumstances is usually wariness, rejection and a desire to find a something to lean on, such as the government or the church. Russia has had more than its share of transition, and while during the Soviet era people looked to the state to provide stability, today more and more Russians look to the church; a recent survey by the Levada Center shows that 75 per-

cent of Russians identify themselves as Russian Orthodox. Some faith traditions, such as Protestantism and Confucianism, encourage their practitioners to take matters into their own hands with mantras like “God helps those who help themselves.” The economic successes of Protestantmajority countries such as the United States and Germany is sometimes attributed to the socalled Protestant work ethic. But Orthodoxy’s teachings emphasize the role of the hierachy and institution over individual initiatives, and these tendencies were reflected in a recent Geert Hofstede cultural dimensions analysis survey of Russians. The Hof-

Does Orthodoxy really have an effect on how Russians work?

stede survey showed Russians as extremely risk-averse with an above-average willingness to trust the authorities — Russians scored 39 out of a possible 100 in the category of individuality; 36 for perseverance, ambition and the will to win; 95 for the desire to avoid uncertainty; and 93 for a belief in paternalism and authoritarianism. Some experts see these characteristics as detrimental to Russia’s economy. According to Natalya Tikhonova, department head of the Faculty of SocioEconomic Systems and Social Policy at the Higher School of Economics, instead of trying to improve things for the better, Russian managers instead strive to minimize the potential blowback of any kind of change. “People are wising up to the fact that initiative leads to punishment, and it’s not worth pushing,” Tikhonova said. “Our economic system places the bean-counters far above the innovators.”

But not all is lost. Concepts of values and behavior can change over time, according to economist Alexander Auzan. “Things like high levels of avoidance are things you just have to work on,” said Auzan. He pointed out that the experience of Russians working in Germany and the United States shows that in a different environment, Russians can be individualists with a desire for selffulfillment.They fit well into small innovative companies and succeed in non-standard tasks. Auzan also noted that religion is not necessarily a hindrance to development, citing the experience of Germany’s predominantly Catholic region of Bavaria after the Second Vatican Council.“Bavarians became better Protestants, in some ways, than Protestants themselves,” Auzan said, “because for a decade after the SecondVatican Council, the Catholic Church radically altered its interpretations of concepts of values and behavior.”

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Roskosmos With a reform underway and an ambitious strategy for the next 20 years, the space agency hopes its best years are ahead

Russian Space Agency Sees Its Future in the Stars (and Planets) The Next 30 Years Among the plans Roskosmos has for the near future are the construction of a new cosmodrome in eastern Russia and a base on the moon.

Roskosmos marked a milestone in 2011 with the completion of the Glonass navigational satellite system — Russia’s answer to G.P.S., which relies on U.S. satellites.

Unfortunately, 2011 was mostly notable for its disasters, including the loss of Phobos-Grunt, a probe intended to explore the Martian moon Phobos.

In 2011, construction began on a new cosmodrome in the Amur Region, which should allow Roskosmos to move launches out of Kazakhstan into Russia by 2015.

Roskosmos’ most ambitious nearterm goal is the establishment of a permanent base on the surface of the moon. The agency hopes to fulfill this mission by 2030.

INTERVIEW IGOR MITROFANOV

Mooning Over Earth’s Closest Neighbor

Preparing for Life on Mars Russian scientists are making advances that will allow a team of astronauts to visit the Red Planet, but there are challenges to a Mars mission than cannot be replicated on Earth. ANDREI KISLYAKOV SPECIAL TO RBTH

The next step in mankind’s journey of discovery in space is likely to be Mars, at least according toVitaly Lopota, president of Russia’s Energia Rocket and Space Corporation. “Over the next 50 years, Mars will be the focus of space research and exploration,” said Lopota. “This planet could be a relatively comfortable place to live — air pressure is just a hundredth of what it is on Earth. When looking into the task of space colonization, Mars is a good place to start. Moreover, Mars is the only planet with enough water to support humans.” Russian scientists have already begun to explore this possibility. They have developed selection criteria for a team to fly to Mars, based partly on their experiences in the Mars-500 project, which confined six astronauts to a spaceship-sized facility for 520 days — the length of time scientists believe necessary to fly to Mars and back. The experiment took place from June 2010 to November 2011. “In choosing a team for a Mars mission, we are mainly looking for

genetic attributes and top results on rigorous physical and psychological tests,”said Anatoly Potapov, a researcher for the Institute of Biomedical Problems at t h e R u s s i a n A c a d e my o f Sciences.“We now have every tool at our disposal to help develop a system that will ensure the biomedical security of the Mars mission.” Specialists at the Institute for Biomedical Problems believe the most pressing task is to find a way to create a self-sustaining system in space that will ensure a constant supply of oxygen, water and food, and also provide for the elimination of metabolic waste products. In order to create such a system, scientists say they need at least 10 years. Additionally, while the Mars500 experiment did much to increase scientists’ understanding of how humans cope psychologically with prolonged periods in space, scientists were unable to recreate some of the conditions cosmonauts would have to contend with on a real flight. Victor Baranov, assistant director of the Institute of Biomedical Problems, explained that a similar experiment is set to be conducted with chimpanzees: “They will be subjected to the same radiation levels that are in space, whereas other issues will be examined using human testers.”

THE NUMBERS

687

Earth days is how long it takes Mars to orbit the Sun. A Martian day is about half an hour longer than an Earth day.

miles is the height of Olympus Mons, the tallest volcano on Mars. It is three times the height of Mount Everest.

pounds is how much a 100-pound person would weigh on Mars. Mars has less mass than Earth and therefore less gravity.

But even these tests cannot provide conclusive answers on the consequences to the human body of spending long periods of time in space — such as the effect of long periods of weightlessness. American scientists believe that people who have spent prolonged periods of time in space suffer from a loss of bone density. Observations carried out on 13 astronauts, each of whom had spent six months at the International Space Station (I.S.S.),

revealed that their skeletal mass had decreased by an average of 14 percent since they left Earth. And, physical symptoms are just part of the problem; prolonged space travel also places humans under immense psychological strain. The effect of being an unimaginable distance from the Earth; the long monotony and isolation of space travel; the cramped conditions on board the spacecraft; the strange sensation of weightlessness; personal tensions within the team; the substantial workload, both on board the ship and out in open space; the unpredictable nature of the job; the huge risks involved and a sense that the entire mission rests on your shoulders are all stresses a cosmonaut has to contend with daily. The experience of participants in the Mars-500 mission and cosmonauts who spent time at the I.S.S. has contributed to a deeper understanding of the psychological consequences, but many questions still remain. Until now, cosmonauts have had teams of psychologists on hand at mission control, and support has always been readily available where the signal conditions were good. However, on a trip to Mars, mission control’s role will be significantly reduced. Signals from Earth will take 40 minutes to reach the Red Planet.

Are space specialists seriously discussing lunar bases? The moon is naturally our immediate objective in space. I believe its development will start in the 21st century. There will be lunar bases just the way we have bases in Antarctica. We used to have two rovers on the moon, and we brought back soil from there. The knowledge gained in Soviet times has not been lost, and we are capable of doing all the things our predecessors did.

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Mars is the only planet whose surface can be seen in detail from the Earth; it may also be the only other planet that could sustain life.

Russian officials are speaking with growing confidence about the moon being the top priority of the Russian space program. Russky Reporter magazine asked Igor Mitrofanov, chief of the gamma ray spectroscopy lab at the Space Exploration Institute of the Russian Academy of Sciences, to share his thoughts on the subject.

Igor Mitrofanov believes space research benefits all of society.

HIS STORY NATIONALITY: RUSSIAN

So far, the Russian program has only two moon-related projects: LunaGlob and Luna-Resurs. What is their progress? The projects were revised early this year following investigations into the Phobos-Grunt crash. We have learned our lesson. We recently completed testing the engineering models of equipment for landers and will soon start integrated tests. Luna-Glob is expected to land on the moon in 2015. The orbit will be explored in 2016 and the heavier orbiter Luna-Resurs is scheduled to land near the southern pole of the moon in 2017. There is the Moon Test Ground project — a robotic deployed base — at the Lavochkin Research and Production Association. Is this still being discussed as your next step? It is our plan for the future. I learned a great deal from the way [Sergei] Korolyov, the great Soviet rocket engineer and spacecraft designer, used to work. He turned every project into a step towards the next one. The concept of the test ground is something that we need to strive for on the current projects.

STUDIED: PHYSICS AND ASTROPHYSICS

Born in Leningrad (now St. Petersburg), Igor Mitrofanov studied physics at Leningrad State University, focusing on quantum mechanics. He did graduate work in astrophysics at the Ioffe Physical Technical Institute (also in Leningrad) before leaving for Moscow in 1981 to take a job at the Space Research Institute (IKI), where he still works. MItrofanov specializes in high-energy astronomy.

Wouldn’t it be wiser to invest in the development of cheaper launch vehicles and then think about lunar bases? I’m doing my best to fight the stereotypes that the project is expensive. We need to remember that the first projects I’m talking about cost about 10 billion rubles. When we speak about ambition, this is small change. We also need to remember that this money doesn’t fly to the moon, but stays here as infrastructure, jobs and new materials.

Space Weather NASA and Roskosmos focus on the importance of solar flares

Russia and the United States are both redoubling their efforts to study the relationship between solar flares and space weather — and how they affect life on Earth. ANDREI KISLYAKOV SPECIAL TO RBTH

Russia’s space program is directing more time and money to its Intergelio-Zond vehicle, which will allow scientists to get closer to the sun than ever before. The vehicle, which is projected to launch in 2018, is currently in the research stage. Intergelio-Zond will help scientists gain a deeper understanding of solar flares, which have a significant impact on space weather, which in turn affects advanced technological communication systems on Earth. “The vehicle will be sent close to the sun with the help of a grav-

ity-assist maneuver near Venus,” said Lev Zelyony, director of the Space Research Institute (S.R.I.) at the Russian Academy of Sciences. “It will be delivered into orbit with a perihelion [the orbital point closest to the sun] of 42 million kilometers [26 million miles]. The perihelion may be eventually halved to 21 million kilometers [13 million miles], following other gravity-assist maneuvers that make it possible to monitor the same areas of the surface of the sun for longer periods — up to seven days. “The module may descend even closer to the sun: its minimum altitude will be limited only by the evaporation of the protective screen caused by solar emission. This will give the vehicle its own ‘atmosphere’ that will distort measurements.”

Understanding the effect of solar flares on space weather is also an important aspect of NASA’s Living with a Star program, which studies radiation belts — the rings of high-energy particles

Space weather disruptions to U.S. government satellites cause $100 million in damage each year. surrounding the Earth. These radiation rings depend on solar activity and space weather created by the sun, and can disturb the operation of satellites and communication systems. “We still don’t understand how the belts behave, more than 50 years after they were first recog-

nized and described,” said Lika Guhathakurta, a NASA program scientist. “Nor do we have the ability to make any predictions, which is really very important.” Solar activity, such as flares, magnetic storms and fire outbursts, can vary in intensity from hardly perceptible to powerful storms. Poor space weather is also known to impede the work of all orbital systems. The U.S. Department of Defense has estimated that space weather disruptions to government satellites add up to nearly $100 million each year. In 1996–2005, insurance companies paid about $2 billion to cover damages and losses of space vehicles caused by solar activity. The American continent is most vulnerable to fierce solar storms because of its proximity to the north magnetic pole.

NASA

Here Comes the Sun, But Everything Might Not Be Alright Scientists closely monitor the sun’s surface for storms and flares.

Solar Storms Dangerous for Technology In September 2009, the American G.O.E.S. meteorological system detected an unusually high intensity of the Sun in the X-ray range, while astronomers discovered two bright regions on the Sun. Scientists were concerned about the discoveries because solar activity causes the radiation belts around the Earth to expand, threatening

the work of satellites. The strongest solar storm ever was registered on Aug. 28 1859. The storm caused a breakdown of the telegraph system, which suffered a voltage spike. Storms of this scale only happen once every five centuries, but those half as strong take place about every 50 years. The most recent one occurred on Nov. 13, 1960.

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Internet With the launch of a new browser and an app store, Russian search engine Yandex isn’t taking its dominant marketshare for granted

Yandex Takes a Shot at Google Russian Internet search firm Yandex has opened a new front in its ongoing war with Google with the addition of two new products aimed at end users. ALEXANDER PANOV RUSSIA BEYOND THE HEADLINES

THE NUMBERS

60%

is Yandex’s share of the Russian search market, according to statistics from LiveStat. The company also dominates search in Ukraine and Kazakhstan.

48.6

million is the monthly audience of Yandex according to a recent survey by ComScore. The company hopes to grow its audience through its new products.

PRESS PHOTO

Yandex is following in the footsteps of Google in a bid to retain its leading positions on the Russian domestic market. In July 2012,Yandex dominated Google, with 60.5 percent of the market compared to Google’s 26.7 percent. However, Google is outdoing its Russian rival in terms of revenue and income growth.Yandex hopes its new products targeting the end user might turn the tables. Yandex Browser has taken all the best features from Chrome and Opera: the former contributed the engine and the free Chromium shell, while the latter provided its Turbo Web traffic reduction technology, expected to be introduced in the upcoming versions of the browser, which Yandex has promised to update every few weeks. The traffic compression tool was not the only thing the Russian search engine purchased from Opera: It also bought a software distribution licence for 40,000 applications, which allowed it to open its proprietary Yandex.Store, offering programs for both software engineers and users. The digital marketplace will operate globally, featuring a stock of software products designed by Russian and foreign de-

Yandex C.E.O. Arkady Volozh plays with a plush version of the Yandex Browser logo.

velopers. Yandex plans to strike a number of deals with smartphone and tablet manufacturers to haveYandex.Store preinstalled on their devices instead of the default Google Play. The Russian company has already reached agreement with PocketBook, 3Q

and Texet, which manufacture tablets and e-readers, as well as with one of Russia’s big three mobile carriers, MegaFon. In developing its browser,Yandex leveraged its long experience of working in the Russian-speaking part of the Internet with the

previously designed solutions. “Understanding the structure and content of Web sites, as well as using technologies that only Internet search companies have, helps us create a new-generation browser that will assist users in everything they do,” said Tigran

Mobile Internet Apple’s longstanding competition with Google pays off for Russia’s Internet search powerhouse

Yandex Maps: Coming Soon to an iPad Near You The conflict between Apple and Google pays off for Yandex; its maps will be feature on new iPhones and iPads in Russia in place of Google’s product. ALEXANDER VOSTROV SPECIAL TO RBTH

SLAVA PETRAKINA

Russian I.T. giantYandex has entered into a partnership with Apple to have its Yandex Maps location service integrated into Apple’s new iOS 6. The deal is definitely a plus for the Russian firm, asYandex will enjoy a global promotion campaign almost free of charge.Yet analysts agree that the American corporation will reap most of the benefits. Eldar Murtazin, lead analyst at

Mobile Research Group said: “Yandex is a perfect starting block for Apple, which made the momentous decision to remove Google Maps from its operating system. Apple opted for the open format of OpenStreetMap; but this requires local mapping data. Yandex will be the one to provide these data.” The company’s data applies primarily to queries that users enter when searching for specific locations. Queries of users are carefully collected and consolidated into a large database, which is designed to store information about the preferences of each user —not only what streets they search for, but what restaurants

Apple’s decision to dump Google Maps will benefit third parties.

and shops on those streets. The database is therefore a powerful advertising tool. Vasily Prozorovsky, analyst at CNEWS Russian IT Review, said: “Integrating Yandex maps into the Apple operating system should be considered in the context of the rivalry between two mobile operating systems: iOS and Android. The latter belongs to Google, and Apple’s eagerness to phase down its cooperation with its competitors is understandable. Apple will end up ‘making friends’ with any noncompetitor; and companies from Russia, Brazil and so on have a good chance to get into its ecosystem.”

QUESTIONS & ANSWERS

Expert Predicts an E-Commerce Boom ITAR-TASS

Oleg Ryazhenov-Siems developed his firm’s online business.

ITAR-TASS

Svyaznoy mobile phone stores can be found across Russia; the average person passes two or three a day.

Oleg Ryazhenov-Siems has led the ambitious online strategy of Svyaznoy, the second largest Russian consumer electronics retailer, since 2009. Recognized as one of Russia’s best e-commerce professionals, he has reently been appointed Svyaznoy’s Director of Strategic Marketing and Advertising. Ryazhenov-Siems spoke with East-West Digital News about the challenges in Russian e-commerce.

Why did Svyaznoy launch an online business when its offline activities were thriving? Nowadays, developing a business through different channels is a necessity. Furthermore, in the case of Svyaznoy, our online and offline audiences are not the same; the overlap represents just from 20 percent to 40 percent, depending on the segment. So, adding the two audiences means significantly growing the business.

How much of Svyaznoy’s business do online sales represent? From $25 million in 2009, we grew to $120 million in 2011. In 2011, e-commerce accounted for 5.6 percent of Svyaznoy’s total sales, up from 3.6 percent in 2010. This is 3.5 times more than the average market ratio. How do your sales develop in the regions? In 2011, Moscow and the Mos-

cow region represented no more than 25 percent of the site’s sales — compared to an industry average of approximately 45 percent — even though sales in the capital continued growing in absolute figures. Svyaznoy was the pioneer in this exciting regional business. We began rolling it out about four years ago; we soon had seven regional warehouses across the country. This gave unbelievable results. Of course, this was made possible by Svyaznoy’s huge offline network. We use every retail outlet as a pick-up point. This is much more convenient than waiting hours and hours for an order to be delivered. Our customers can choose any outlet across the country as a pick-up point. There is likely to be one located near the customer’s home or workplace: we found that every Russian passes by two or three Svyaznoy outlets during the day. When transactions are truly convenient for consumers, business grows easily. That’s what actually happened with this online-offline formula.

What is the size of your market segment? This market is chaotic. Established players — Svyaznoy, Euroset, Ozon and M-Video, and a few others — represent perhaps half of the market. The other half is made up of a plethora of small players, which is difficult to control since many of them work informally and illegally. This business is particularly developed in the regions, where it covers up to 90 percent of the market. The market is developing so fast, including its gray part, that no one wastes time assessing it. Several organizations, from Data Insight to R.A.E.C. to Goskomstat, try to assess the size of the market. But their methodologies, their classifications and their results may diverge significantly. For instance, Data Insight has estimated the portable electronics market at $1.1 billion in 2011. That figure may be wrong, but if there is no other estimate available, I have to trust it. How do you envision the Russian e-commerce market in the coming five years? It will grow explosively.There will be more and more players coming into the market, with many more customers purchasing. The regions, where the current average Internet penetration doesn’t even reach one-third, will develop at high speed. So far, Russian Internet users haven’t been very active online shoppers, but just a few years ago, our parents were scared to send an SMS. Now they are used to it. As soon as our younger generation realizes that purchasing via the Internet is convenient, profitable and safe, they will make a massive switch to it. This business has golden years ahead.

Khudaverdyan, head of software and mobile development at Yandex in a press statement. This means that the user can benefit from Yandex services integrated into the browser, which are almost identical to those provided by Google: searching, email, cloud data storage and a machine translation tool capable of processing words and Web pages. Other features include display functions for PDF files and Flash animations, as well as playing audio tracks with no external applications required. The built-in Kaspersky Labs module will protect users from malware. According to Yandex designer Konstantin Gorsky, the company’s browser has the leanest interface on the market: screenshots reveal it only has a search bar, a tab panel, a Back button and a clickable Yandex logo. The detailed browser development report uploaded byYandex software engineers to Habrahabr, a specialized Russian-language online community, mentions that the user interface will only show the Forward button, a traditional browser element, when there is some destination to which it can lead. The visuals were yet another focus of the company: Yandex software developers wrote that 50 various designs were made for the above-mentioned button alone. Most navigation tools are identical to those in other browsers. Yandex Browser is not the company’s first attempt at the medium. It already has Yandex.Internet, which is also based on the Chromium freeware but had significantly fewer modifications. The statistics compiled by the Russian Web counter LiveInternet show that the company’s old browser has been able to secure only 2 percent of the national market, with Google Chrome currently on top with 22 percent. By launching its own browser and app store, Yandex built the missing infrastructure link to the end user, according to Yandex C.E.O. Arkady Volozh. The number of search queries directly influences the contextual advertising revenues, the biggest source of income for search engines, and browsers remain one of the key distribution channels. Part of the reason Yandex has developed its own browser might be the decision by Mozilla, the developer of Firefox, in June to make Google the default search engine for Mozilla’s Russian-language installation package.Yandex is still available as an option, but most users are reluctant to change the initial settings.

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Money & Markets

Banking Despite stability in the sector, foreign banks remain wary

Foreign banks that opted to wait out the global financial crisis in Russia are now poised to reap the benefits of the country’s relatively stable financial sector. FELIX GORYUNOV SPECIAL TO RBTH

In the third year after the 2008– 2009 financial crisis, the Russian banking sector looks enviably stable. The assets of Russian banks have reached 77 percent of gross domestic product, with annual growth of about 20 percent. Another indicator of Russia’s financial resilience is the fact that Russian banks have turned from net-borrowers in international money markets to netcreditors. Last year, the return on capital of Russian banks surpassed the pre-recession level. According to the Central Bank of Russia (C.B.R.), in state-owned banks the margin reached 20.6 percent and in foreign banks, 17.4 percent. Foreign banks currently account for 24 percent of the country’s banking assets, but the percentage seems unlikely to grow. Tough competition from state banks and the end of easy money combined with shrinking profit margins caused a number of foreign banks to reconsider their involvement in Russian retail banking in 2008–2009, and few are willing to consider re-entering. Spain’s Santander, Belgium’s KBC Groep NV and Baltic lender Swedebank AB all sold business or wrote down losses in Russia in 2010. In the spring of 2011, they were joined by two top-ranking British banks — HSBC and Barclays. As a spokesman for Barclays told the Financial Times, the decision to sell its retail arm was

made because the bank needed a higher return on equity and this line of business in Russia could not meet its long-term objectives. For those banks interested in remaining in the country, two options appeared: consolidation of assets by acquisitions or mergers with local lenders or investing heavily in the country’s fastestgrowing sector: retail banking. UniCreditBank Austria AG, a member of the financial group UniCredit, became No. 8 among Russia’s 10 largest banks by value of assets by acquiring a 100 percent stake in International Moscow Bank, Russia’s oldest private

Foreign banks currently account for 24 percent of Russia’s banking assets, and this number is unlikely to grow. In retail banking, two subsidiaries of foreign banks in Russia stand out: ZAO Raiffeisenbank and ZAO Citibank. credit institution. UniCredit now has a network of 106 offices and provides financial services to 1.1 billion customers. The ninth position belongs to Rosbank, a brand name acquired by the French firm Société Générale S.A. after it bought 82 percent of the Russian bank’s shares. Rosbank has 700 offices in 70 regions and boasts of having 3 million customers. Another large foreign retailer, OTP Bank, which belongs to a Central and Eastern European banking group,

strengthened its financial position by acquiring a controlling stake in Investsberbank.The lender has 163 end-to-end service points and claims to be operating through a large network of partners providing 28,000 loans to individual and small business clients all over Russia. In retail banking, where hardearned prestige and customer loyalty are major guarantees of sustainable business growth, two foreign banks stand out as the most successful in Russia. These are ZAO Raiffeisenbank, a subsidiary of Raiffeisen Bank International AG, and ZAO Citibank, a subsidiary of Citigroup. Raiffeisenbank has been operating in Russia since 1996 and, after acquiring retail lender Impexbank in 2007, now ranks fifth in terms of private customers’ deposits and 10th in household lending. With 210 offices in major regions, the bank is set to expand retail operations “in line with a growth of profit volumes but not ahead of the market,” the bank’s C.E.O. Sergei Monin told Russian business daily Vedomosti. Still more impressive is the stance of Citibank, which is now celebrating 20 years of work in Russia. The Citi’s local subsidiary is an expression of the group’s global strategy which, as Citigroup C.E.O. Vikram Pandit recently told the Financial Times, is “to glean the majority of its business from emerging markets.” Amit Sah, the head of consumer business at Citi Russia, said that Russia has always been a top priority for his company.“Today, Citi is the only global bank that has grown organically in Russia. It is the country’s third-largest international bank by assets, both in

ITAR-TASS

Hoping to Cash in on a Long-Term Investment

Foreign banks that weathered the financial crisis in Russia hope their knowledge of the market will pay off.

consumer and corporate business. We have over one million private customers who are served from 50 retail branches in 12 cities and provide services to over 500,000 credit card holders,”Sah said. Citibank’s marketshare can be partially attributed to its primacy in offering Internet banking to Russian clients and introducing cashback credit cards and cash-in A.T.M.s. This pioneering of stateof-the-art banking technologies and revolutionary products in Russia is based in the bank’s consumer business strategy, Sah said, which is founded on empowering the emerging middle class and serving them at their convenience. Citibank focuses on products and services in which it has proved to be truly professional — cards, wealth and cash management. These foreign banks that remained committed to their Russian business now find themselves in a position to take advantage of the explosive growth in Russian retail banking. The number of Russians with debit accounts increased from 11 percent to 19 percent last year.

Foreign banks in the Russian market

Acquisitions China’s path to energy supplies goes through Russian companies

Credit French firm expands retail business

China Eyes Russian Assets

Société Générale to Let the Consumer Lead the Way

A recent seminar on mergers and acquisitions in emerging markets focused on China and its purchasing power both vis-à-vis Russia and within the country itself.

Disappointed with its retail business worldwide, the French banking giant sees an opening for growth in its Russian subsidiaries, particuarly Rosbank.

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THE QUOTE

Sascha Hodl PARTNER, SCHOENHERR LAW FIRM

“In its geographical area Russia has strong competition. The Polish and Turkish stock markets have outperformed the Russian market.”

PRESS PHOTO

While many economies around the world are running out of steam, China’s purchasing power continues to grow. The world’s second-largest economy has an almost insatiable demand for resources, and China is looking for places to get it — acquiring companies in Russia and the United States, among others. At the beginning of October, the 2012 International M&A Advisory Summit gathered specialists in mergers and acquisitions in NewYork City for an exchange of best practices in M&A with concentration on the BRICS countries, but China dominated the discussion. “During the next 10 to 15 years, China will invest around $1 trillion abroad,” said Yuan Tian, chairman of the China Entrepreneurs Forum Yuan Tian. “More and more Chinese manufacturers would like to go to other countries to set up the manufacturing there and sell locally,”Tian said. But where that isn’t possible, an alternative way of penetrating a market is to buy a business that has its own technology, competitive brand and distribution channel in place. Speaking about the situation

Yuan Tian, chairman of the China Entrepreneurs Forum, speaking at the recent M&A summit in New York.

Russia is attractive for China not only for energy, but also for infrastructure that gives access to Europe. in China, Alexis Rodzianko, chief financial officer of Russia’s Metropol international investment and industrial group, said: “China is intensely consuming energy, so they are interested in buying energy production sites, as well as steel and metal production.” The abundance of natural re-

Russia Beyond the Headlines ONLINE

sources in Russia attracts Chinese investors, who have also acquired a lot of companies in the Far East. Rodzianko said that Russia has stable growth, but it is cheap to enter the market since the country is perceived as riskier than it rationally should be. Rodzianko said that his company has been in discussions with Chinese parties about buying assets in Russia but has not yet finalized any deals. The negotiations go more slowly with Chinese enterprises, as the companies need to receive approval from the state for any major transaction. Wei Wang, chairman of the

China Mergers & Acquisitions Association, said that Russia is attractive for Chinese investors not only for oil and gas, but also for the infrastructure that provides access to Europe. Russia itself has shown interest in buying companies in Europe in recent years, but this activity slowed following the 2008 financial crisis. The latest big acquisition was the February purchase of Austria’s Volksbank by Russian banking giant Sberbank for approximately $800 million. The deal earned Sberbank the Financial Service Deal of the Year award at the summit.

DARIA BORISYAK SPECIAL TO RBTH

Société Générale, France’s second-largest bank, is looking to increase the profitability of retail operations at its subsidiaries in Russia by the end of 2013, according to C.E.O. Frederic Oudea. Société Générale Group’s main retail subsidiary in Russia is Rosbank; it also owns Delta Credit and Rusfinansbank. Since the beginning of 2012, Rosbank’s retail portfolio has increased by 8 percent, and growth of 18 percent is slated by year’s end, according to Vladimir Golubkov, chairman of Rosbank’s board.“People’s credit activity is quite high. In August, we issued loans worth more than 12 billion rubles ($384 million),” Golubkov said. “The anchor product is a mortgage; it allows you to build lasting relationships with customer. Cash loans and traditional auto loans are also popular.” Rosbank’s retail portfolio in the first half of this year totaled 193.6 billion rubles ($6.1 billion), of which mortgages made up roughly 23.8 percent, auto loans 34.5 percent, and credit cards and

The U.S. goes to the polls. Will the outcome damage the reset with Russia?

ITAR-TASS

ANNA ANDRIANOVA

Société Générale plans to increase its offerings in Russia.

overdrafts 7.6 percent. Rosbank’s profit for the first six months of 2012 was $188 million. If growth continues at the present rate, the bank’s loan portfolio could see an increase of 18 percent by year’s end, according to analyst Olga Ulyanova of Moody’s. According to Andrei Maltsev, deputy chairman of Nordea Bank, Société Générale’s decision to focus on retail is perfectly logical: Western banks can borrow on attractive terms, which gives them a competitive advantage and allows them to vie with state-owned banks — but the same benefits don’t apply in the corporate segment.

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Putin at 60 Struggles With Image at Home and Abroad rbth.ru/18917

DOWNFALL OF THE DOLLAR? GLOBAL CHANGES FAVOR EMERGING MARKETS Nikolai Podguzov SPECIAL TO RBTH

There are strong preconditions in place for the Russian ruble to become a regional reserve currency. 2008 economic crisis. Furthermore, Russia’s debt burden is the most conservative among G20 countries: it has only a 10 percent debt-to-G.D.P. ratio. Russian budget policy has also been prudent enough in recent years, with the absence of a budget deficit. Russia’s balance of payments remains in positive territory, primarily due to a current account surplus. Consequently, Russian reserves have been on a sustain-

Nikolai Podguzov is head of Fixed Income Research at V.T.B. Capital.

IN UNCERTAIN TIMES, STABILITY TRUMPS RISK Stanislav Mashagin SPECIAL TO RBTH

he balance of world currencies established at the close of the 20th century has not changed for several decades. The principle share of the market belongs to the U.S. dollar, with the euro (which inherited the shares of the German Deutsche mark and French franc) in second place and the Japanese yen in third place. However, over the past decade a couple of the leaders have taken some hard blows. Meanwhile, several hitherto relatively minor currencies have staked their claim to a share of world markets. The most serious overtures have come from the Chinese yuan, but the currencies of the other BRICS countries cannot be disregarded. In recent years, foreign exchange investors have talked nonstop about what the configuration of the world’s currencies may look like in the future; nonetheless, despite stern and constant predictions of the death of the dollar or the hopelessness of the euro, the actual balance rates remain unaltered. That is to say, investors are not rushing to switch

BARACK OBAMA OR MITT ROMNEY: WHO WOULD RUSSIANS CHOOSE? Eugene Ivanov SPECIAL TO RBTH

t’s safe to say that Russians are fed up with presidential elections. Having gone through a high-profile presidential election campaign at the beginning of the year — a campaign accompanied by heated and often nasty political rhetoric and then followed by a series of protest actions organized by the opposition — Russian citizens, to be sure, can live the next few years in quiet. Naturally, there is even less interest in presidential elections in other countries. Yet there is evidence that many Russians are paying close attention to the ongoing presidential election campaign in the United States. This attention has its roots in a deep, even bordering on obsessive, interest in all things American and — whether or not Russians themselves would be willing to admit it — on the fact that the United States still remains perhaps the only country whose opinion actually matters to Russia. So, if given a chance, who would Russians vote for in the U.S. presidential election: the sit-

their dollar portfolios into another currency. Turbulent times give rise to much speculation about the reliability of one currency over another, but the overriding strategy remains the calculated and cautious approach of keeping funds in trusted currencies. Market players assess currencies on the basis of three main criteria: influence, stability and future outlook. The most influential are the U.S. dollar, the euro, the Japanese yen, the Swiss franc

The overriding strategy remains the calculated and cautious approach of keeping funds in trusted currencies. and the British pound. Currently, the most stable currencies (in descending order) are the Japanese yen, the Hong Kong dollar, the Chinese yuan, the U.S. dollar, the Singapore dollar, the Swiss franc, the Russian ruble, the South Korean won, the Indian rupee and the Israeli New Shekel. In terms of future outlook, the small currencies of countries that are less dependent upon global

NATALIA MIKHAYLENKO

he most recent data from the International Monetary Fund (I.M.F.) shows that the composition of global foreign exchange reserves has changed only gradually over the past several years despite pressure on both the U.S. dollar and the euro. At the moment, the U.S. dollar retains its place as the leading reserve currency, at around 62 percent of total reserves. The U.S. dollar, however, is on a gradual trend of decline. The eurozone crisis has slightly dented the amount allocated to the euro, though not by much — euro reserves still stand at just below 25 percent. However, uncertainty surrounding the future of the monetary union has resulted in a loss of confidence that is reflected in the periodic pressure put on the euro. This loss of confidence is also evident in the flight of deposits from banks in the south of Europe to safe havens in the north. In going forward, much depends on the ability of eurozone policymakers to resolve the debt and banking crisis, as far as future developments in world currency reserves are concerned. However, sovereign debt problems are not confined to the eurozone. The U.S. faces a major challenge in its unsustainable fiscal position, which finds the country’s federal debt-to-G.D.P. ratio at its highest level since 1950. In the aftermath of the U.S. presidential election in November, economic failure could result in credit rating downgrades for the United States, as well as adverse interest rate volatility and weakness in the U.S. dollar. In the event of a break-up of the European monetary union, the immediate risk facing investors is the introduction of new currencies or, more accurately, the return of national currencies. In any case, the international monetary system is evolving toward a multipolar currency system that reflects changes in the global economy over the last 15–20 years. The center of gravity has shifted from West to East, and now the emerging economies are making a significant contribution to global economic growth and world trade. The importance of their currencies will grow as these economies expand. But reserve currency status is a function of not only economic size but also liquidity and transparency in money markets and capital markets. By this scenario, Asian

currencies such as the Chinese yuan could easily become important investment and trading currencies in the East. The role of the Russian ruble in the global economy may increase as well. There are strong preconditions in place for the ruble to become a regional reserve currency within the next several years. The Russian economy has maintained a moderate but sustainable positive growth rate of 3 to 5 percent since the

able recovery trend since 2008, and currently the Central Bank of Russia (C.B.R.) has the thirdlargest reserves in the world. Russia abandoned capital controls in 2007, and, even during the 2008 economic crash, authorities had no intention of bringing them back. Russian monetary policy has recently been moving toward inflation targeting and currently the C.B.R. operates under a nearly floating exchange rate regime. As a result, interest rate volatility has been reduced and the C.B.R. is better positioned to keep inflation under control. Inflation in Russia has been brought down from double digits to 6.3 percent in 2011 and is forecasted to stay around 7.0 percent this year. Russian regulators have also been working to improve the local bond market infrastructure. Russia’s local bond market cap amounts to almost $300 billion. By the end of the year, a central depository will be launched and nonresidents will be allowed to open nominal holder accounts. This improvement creates the necessary preconditions for the largest international clearing houses in the world to begin settling Russian local bonds. Hence, the process for ruble-denominated local bonds will be brought in line with best international practice over the next few months. The rise in the ruble’s standing is a reflection of the general strength of Russia’s investment position, particularly when contrasted with the current challenges facing the eurozone.

ting president Barack Obama, a Democrat, or his Republican opponent, the former governor of Massachusetts Mitt Romney? Answering this question is tricky. For starters, even the electoral preferences of Russians living in the U.S. are far from clear. Back in the 1980s and 1990s, the consensus was that RussianAmericans overwhelmingly voted for Republicans. The explanation was that, being intrinsically“conservative,” Russians were better aligned with the conservative social and economic views of the Republican Party. Besides, as political refugees from the Soviet Union, they idolized Republican President Ronald Reagan, whom they credited with forcing the Soviet leaders into allowing Jewish immigration. But much has changed since then. In the intervening years, scores of Russians came to the U.S. not as political refugees, but as skilled workers, bringing along a diversity of social and political views. And, as aging refugees of the 1980s and 1990s are becoming more dependent on state programs, such as Social Security and Medicare, they may feel more appreciative of some policies as-

sociated with Democrats. But what about Russians living in Russia who are not versed in the intricacies of U.S. domestic politics and who view American politicians from mostly personal points of view? One factor that would play against Obama in the eyes of Russians is his race. It’s no secret that a disturbingly large number of Russians hold a negative view of Obama because he’s African-

Gone are the days when Russian pundits hailed the pragmatic views of Republican candidates on arms control. American. On the other hand, Russians seemingly favor known quantities over unknown personalities and clearly have no problem with the politicians who have been in public service forever. From this point of view, many Russians would be expected to favor Obama because they’re used to him. More importantly, Russians see Obama’s policies toward Russia as generally friendly.

Another factor in Obama’s favor is the strong anti-Russian position of his Republican opponent, Mitt Romney. Gone are the days when Russian pundits hailed the pragmatic views of Republican presidential candidates on arms control and human rights. There is nothing pragmatic in the way Romney views the future of U.S.-Russia relations: He called Russia America’s “No. 1 geopolitical foe” and went on record describing the New Start nuclear arms control treaty as Obama’s “worst foreign-policy mistake.” Few in Russia would doubt that under a President Romney, U.S.Russia relations will be seriously damaged. So, again, who would Russians vote for in the U.S. presidential election? Hopefully, a Russian public opinion agency will pose this question in one of its future polls. But in the meantime, I’d make a wide guess: 60 percent to 40 percent for Obama. Just don’t let Central Election Comission head Vladimir Churov count the vote. Eugene Ivanov is a Massachusetts-based political commentator.

trends and determine their own monetary policy without looking over their shoulders at others rank first and foremost. These include currencies such as the Swedish krona, the Swiss franc, the Canadian dollar, the Hong Kong dollar and the Australian and New Zealand dollars. These categories together create a list of the most liquid and trusted currencies, the ones in which investors would place funds over the midterm. But the only currency to meet all of these criteria is the Swiss franc. And yet, this is hardly a shining substitute for the dollar. Dealing in Swiss francs is extremely limited by the quantities the Swiss economy makes available; moreover, the current exchange rate of the franc is now artificially pegged to the euro. The Russian ruble deserves separate consideration, since it is surrounded by much controversy and opinions on it vary extensively. Several investment institutions and banks (particularly in the state sector) recommend buying the ruble, yet it does not seem that the ruble is capable of generating exceptional results without being linked to the markets. The ruble is firmly tied to global markets as a result of raw materials trade. The ruble can win in two scenarios: if world markets grow, or if the dollar, euro or other global currencies drop. No one believes in the first scenario. As for the second, experience shows that the Russian government would not allow the ruble to devalue to mirror the U.S. dollar or the euro. The most crucial thing for the Russian government today — in view of the weakness of financial markets and the inability to institute a fully fledged program of federal borrowing — is to reduce the actual value of the ruble. This is the government’s trump card for addressing the federal budget deficits and the pension fund shortages. What should be done with the ruble? It should be sold, spent, and used for borrowing. The fact that the greatest weight in global financial systems is commanded by the U.S. dollar should not be ignored; American investments are found in almost every country across the globe, and the United States is the world’s largest purchaser of goods and services. Whatever happens, this is a currency that will be boasting its dominance in the balance of world currencies for many years to come. Similarly, due to China’s enormous influence on the world economy, China’s currency will remain strong in relation to the market and alongside the U.S dollar. In uncertain times, investors will favor the strongest and most solvent currencies. This means that, these days, a good currency portfolio must include the U.S. dollar and the Chinese yuan. Stanislav Mashagin is a partner at the management firm Personal Strategies.

LETTERS TO THE EDITOR On John Freedman’s column, Sept. 26 Mr. Freedman pokes fun of Leonid Subbotin’s advice to peasant farmers, but Subbotin is apt in his advice. “Subbotin says “The task is not to attack Alexei, but to show how he is attacked.”Very true. Art is not what you see but what you make others see, so says Degas about painting and it is true for theater. Subbotin again:“When peo-

ple’s thoughts and emotions on stage are transformed into action and movement — that is theater.” As many acting teachers have said, the skill in stage acting is to convert psychology into behavior. Mr. Freedman should bite his tongue, not stick it in his cheek. John Frederick Jones, Costa Mesa, Calif.

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Ballet Russia’s most famous dance company takes a big leap by hiring Virginia native

THEATER PLUS

For American Dancer at the Mariinsky, a Turning Point

The Play Becomes Personal at the Lyubimovka Festival

NORA FITZGERALD RUSSIA BEYOND THE HEADLINES

When Keenan Kampa joined the Boston Ballet two years ago, it was not quite as thrilling as it should have been. As happy as she was, the dancer quietly nurtured another dream. After three long, grueling years of study at the prestigious Vaganova Ballet Academy in St. Petersburg, Kampa felt restless, and a little wistful in America. “It was a hard period when I left Russia for Boston. You get used to that system,”Kampa said, referring to the style of Vaganova, the feeder school to the Mariinsky Ballet, formerly the Kirov. Kampa is the first American to graduate from the 274-year-old school that trained Anna Pavlova, Natalia Makarova, Rudolf Nureyev and Mikhail Baryshnikov, among many other legends. “Your body ends up craving the work. It’s a completely different mentality,” she said of the transition from Vaganova to Boston, “and I could feel my technique slipping.” A year ago June, she woke up to her dream: She was invited to be the first American dancer to join the Mariinsky. However she had signed a two-year contract with Boston, and could only join the Mariinsky this summer. On Sept. 2, 2012, 23-year-old Keenan Kampa flew to St. Petersburg to begin her first full season with the Mariinsky Ballet, and will join the company on its U.S. tour this month, which includes stops in California and Washington, D.C. As a new member of the corps, she intends to keep the mighty work ethic she has become known for — even in Russia. As the first American dancer in the company, she does not want to step on toes. But she has her aspirations. “Like any dancer, I want to move up the ranks and become a world-

class dancer and an artist,” she said. What remains unsaid is whether the foreigner-averse Mariinsky, already breaking new ground by hiring Kampa, would ever cultivate an American all the way up to first soloist or principal dancer. Kampa, a seasoned veteran of Russian ballet, has a fighting chance of success. Though her first year at Vaganova may be a chronicle of adversity, it is far from a cautionary tale.

Thousands of students compete for about 70 openings each year. Very few foreigners are accepted to the school, and most stay but a year. The mean girls, bulimic roommates, language problems, demeaning teachers, and small conspiracies — much of it recounted in a film about Kampa produced by Ken

It remains to be seen if the Mariinsky will cultivate an American all the way up to principal dancer. Ferguson — only fueled her drive and her ability to“detach”as she says. In her darkest and loneliest hours, Kampa rediscovered her Catholic faith, using prayer and meditation to calm her agitation. By the second year, Kampa could communicate and her muscles had molded to the new routines. Her confidence grew and so did the support she received — she was selected for plum roles in school productions. Vaganova, and Russia, was all about

PRESS PHOTO

Keenan Kampa is the first American dancer to graduate from the Vaganova Academy and to win a spot at the Mariinsky Ballet, but hard work lies ahead.

“learning how to work.” Kampa says she will never forget the daily corrections she received from her teacher at the prestigious academy: “knees straight, turn out more.” And always, the rhetorical question, “Would you like to do that again?” Kampa started dancing when she was four years old at the Conservatory Ballet of Reston, Va. “There was always a joy in her body when she was moving,”said Julia Redick, her longtime teacher. In class, Redick incorporated the Vaganova method, which she had learned in her native Hungary. At a recent presentation of the Ferguson film in Washington, D.C., Redick also quipped that she taught “Vaganova upside down,” a more eclectic approach, for American child re n . R e d i c k o ft e n brought her students to the Kennedy Center for master classes and when Kampa was a teenager, s h e attended a class that was o b s e r v e d by Mariinsky ballet master Gennady Selyutsky. Afterward, he asked her to come study at Vaganova, an esteemed but under-wraps institution rarely attended by foreigners. In late August, Kampa spent her last days in the U.S. shopping, packing and spending time with friends and family. She also seemed to be preparing herself for her most important year yet. In Boston, she said, she had a life outside ballet.“I was making friends, I had a second job at American Apparel, and I was doing a little modeling,”she said. In St. Petersburg, she acknowledged, she doesn’t have time for a lifestyle. Mostly, she is dancing.“I feel more in shape in Russia,”she said. “There is much more repetition, and they have such a clear idea of what they are demanding. In the U.S., there is more artistic liberty. In Russia, there is a style that has been preserved. It’s a sacred church, and I want to respect it.”

John Freedman THE MOSCOW TIMES

yubimovka is a festival that presents readings of new plays — plays so new that writers may still be scribbling fresh dialogue in the margins as actors head out onto the tiny basement stage at Moscow’s Teatr.doc. Following the customarily frank discussions that occur after each reading, some of those writers might head back to the drawing board and start all over again from scratch. Some may just discard their work in despair. Or, as has happened often enough, some of the plays may be snatched up to become the Next Big Thing. The whole purpose of this festival, founded in 1990, is to help emerging writers and established theaters find each other. It has always been strictly about the play — texts are read simply by actors standing in place or seated on chairs. The 2012 version of the festival introduced audiences to 15 new plays participating in the competition segment, and seven new non-competition plays by established writers. Whether the plays are good or bad, whether tomorrow they will be forgotten or will change the world, they all share the aroma of the here and now. Many drip with the blood of politics. In fact, that has become a traditional aspect of Lyubimovka: giving public airing to social and political themes that get short shrift in Russia’s mainstream media. The readings of probing new plays at Lyubimovka attract a thinking young audience, encourage them to develop their own voices and provide them the faith that those voices can be heard. A few of those generating talk this year were:“Presentation”by Ksenia Dragunskaya; “Nine Months, 40 Weeks”by Alexei Kulichkov and Sergei Shevchenko; a project called “Kidnap” conceived by Konstantin

Kozhevnikov with literary assistance fromYekaterina Bondarenko; “Labor Campers” by Valery Shergin;“One’s Own Land” by Alexander Arkhipov; “Plant Eaters” by Maksym Kurochkin; and“Three Days in Hell”by Pavel Pryazhko. This is interesting and important, but it’s not what compels me to write about the festival. Ever since the festival moved a decade ago from Konstantin Stanislavsky’s verdant Lyubimovka estate outside of Moscow to the hot, airless space at Teatr.doc, there has been another star invariably in attendance — The Spectator. Audiences at Lyubimovka are famous for being highly opinionated. Nobody fears sending a ver-

Many plays drip with the blood of politics. In fact, that has become a traditional aspect of Lyubimovka. bal punch to the chops of a writer or director whose work has just been shown. Following the reading of “Femen’ism,” a play by Dan Gumenny, actress Irina Vilkova flatly stated: “That was bad. I didn’t like anything. Not the play, not the directing, not the acting.” This is expected and, I would emphasize, it is appreciated. Opinions were split more evenly after Anton Pakhomov’s presentation of “Three Days in Hell.” Moderator Kristina Matviyenko declared that this was Pryazhko’s “most socially oriented play”ever. A speaker from the audience, a literary scholar, declared the opposite. She said the play experimented with language and insisted,“The social aspect in this play exists only in the margins.” Praise, derision, laughter or groans are not the point at Lyubimovka. What matters are the connections that happen. All are to the good, because all represent a public plugged into the festival’s efforts to encourage the search for new art and the sharing of diverse opinions.

BIBLIOPHILE

The Mother of Theater Street

PRESS PHOTO

Balletomanes talk about the Mariinsky Ballet in hushed, transcendent tones. The traditions and classics, three centuries of ballet, are kept alive in this company through an enlightened, if arduous, mastery. Considering the tumult of the 20th century, however, it is surprising that ballet survived the Soviet Union at all. Many attribute that feat to one dancer, Agrippina Vaganova. She struggled herself as a young dancer, only to go on and dance the demanding roles of Marius Petipas. The syllabus she later developed, known as the Vaganova method, is still used around the world. The Vaganova Ballet Academy in St. Petersburg is the international headquarters for this exacting technique.

In a 1977 Oscar-nominated documentary called “The Children of Theater Street,” a 90-minute film narrated by Princess Grace of Monaco, viewers get a glimpse of the intense and cloistered world of the Vaganova Ballet Academy of the Soviet Union, when dancers as young as nine years old came from thousands of miles away to endure excruciating auditions. The school has lost none of its luster since that time, and continues to attract even more students, including aspiring dancers from Europe and the United States. Its reputation for greatness — graduates include Anna Pavlova, Vaslav Nijinsky, George Balanchine and Diana Vishneva — is exceeded only by the aura of mystery that surrounds it still.

Visual Art Moscow gallery encourages Russians to embrace their inner darkness

Exhibit Brings Society’s Inner Tensions Out For an ongoing show at the contemporary art gallery RuArts, curator Catherine Borissoff sought to express the tension she sees in today’s Russia. GEORGE BUTCHARD RUSSIA BEYOND THE HEADLINES

RuArts’ gallery space in central Moscow seems an unlikely venue for an exhibition on the theme of noir: It’s an airy place, with long corridors, abundant natural light and a sense of possibility, all in line with RuArts’ aim to encourage the development of contemporary art. But for the ongoing show, Noir, the mood is brooding and sultry. Art director and curator Catherine Borissoff brought together 12 artists for a philosophical investigation of a subject she believes should not confined to Hollywood. “Noir is an emotional state,” Borissoff said, “and it’s present in everyone.” The familiar tropes are certainly recognizable in the artists’ in-

terpretations, but they are updated and redefined. The first painting in the exhibit is Vita Buivid’s portrait of a naked woman wearing high heels, taken from the series “Prime Time.”She is knitting a long black scarf, which is physically attached to the canvas and rolls off along the floor. A cigarette lazily droops

RuArts curator Catherine Borissoff believes that Russian society is poised to reconsider the concept of noir. from her mouth and her expression is one of calm defiance. Next to this work areVladimir Glynin’s stills of ballerinas performing Swan Lake. Borisoff stressed that her view of noir is “not purely black and white, light and dark, but a combination of the two.” Heroes and villains, said Borissoff, “aren’t

positive or negative; they have characteristics of both. Noir should simultaneously attract and repel you.” The showpiece representation of this in the exhibit is the work of Dmitry Tsvetkov, a recent nominee for the Kandinsky Prize, who shows the violent side of the genre through his series “The Heads of Heroes.” He presents the severed heads of famous figures including Marie Antoinette, Cleopatra and Emelyan Pugachev, who led an insurrection against Empress Catherine II (the Great). The concept of the leading man is also explored by Vitaly Pushnitsky, another participant in the Kandinsky Prize, who cuts patterns into photographs of classical statues and religious iconography, partially distorting the images and forcing viewers to reconsider representations of famous historical figures. Such a historical range represents Borisoff’s vision that noir

Ja’bagh Kaghado’s Majestic is featured in the Noir exhibit.

is timeless, that its cynicism, frustration and bleakness have long been part of humanity and never more so than in the present climate. Borisoff believes that Russian society is poised to reconsider the concept of noir: “I saw the internal tension in society, the pessimistic mood, and I realized that noir is more than an artistic genre or the color of your clothes. It’s a state of mind. I realized that quite a lot of people are in this state, and I want this exhibition to inspire people to embrace noir.”

Russian Writers and Their Adventures on the Road Phoebe Taplin SPECIAL TO RBTH

TITLE: OFF THE BEATEN TRACK AUTHOR: IGOR SAVELYEV, IRINA BOGATYREVA, TATIANA MAZEPINA PUBLISHER: GLAS

hile the great era of American hitchhiking has faded, there are still numerous Russians for whom it is a way of life. This fascinating collection of stories by young travelers is a topical addition to the growing number of contemporary Russian novels available in translation. “Off the Beaten Track”(Glas, 2012) is a compilation of three works written by Russian hitchhikers. The first two are novels, clearly based on the authors’ experiences on the road and in the subculture of shared houses of modern Russia. The last piece, “Traveling to Paradise,” charts an autobiographical walking/ hitching odyssey from Russia to Egypt through the Middle East. Jack Kerouac’s influence is most obvious in Irina Bogatyreva’s“Off the Beaten Track,”the longest, central novel from which the volume takes its name. Bogatyreva’s prologue, repeated towards the end, sets out her characters’ lifestyles and philosophy:“wayfarers on roads without end… We are legion, dots scattered along the road, romantic followers of our guru, Jack Kerouac…” They are young, they are free and their motto is “The Road Is Always Right.” The young authors and narrators seek reassurance in new rituals or resurgent religion.

They stress the power of storytelling, collecting tales of the road. The anthropomorphized road itself becomes a character in the central novel and in Igor Savelyev’s “Pale City,” the opening story. “Pale City” is a fresh and vivid roadside love story, winding through the Urals and following each interconnected hitcher across the “vast expanses of his [or her] native land.” One reason for Kerouac’s particular resonance in Russia is a shared sense of distance. The boundless Russian steppe is a recurring motif:“our immense, immense country,”Bogatyreva’s heroine, Titch, calls it. One of the traits shared by all three writers is a powerful sense of place, lost in the forest or having coffee in Diyarbakir. Russia, distinct and massive, is always present, whether they are traversing its endless roads or comparing it with other countries. Savelyev’s chief protagonist, Vadim, talks about watching the shooting stars beside the unlit highways: “Russia’s not like Belgium, where they have floodlights on the motorways.”Over here,“it’s just you and the stars.” Loneliness becomes a key image in the novel. Savelyev observes at the end that many hitchhiking terms have been borrowed from English, but “the roads, the solitude and the melancholy are quintessentially Russian.” Tatiana Mazepina, whose memoirs end the book, also loves to “scare the locals with stories about Russia. To tell Austrians who can cross their country in five hours that in order to get from Moscow to Vladivostok it takes six days by train.”Mazepina travels not to be alone, but to discover kindness, “to disprove all the things people so love to say against each other.”

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Has Russia’s Film Industry Lost It at the Movies?

ITAR-TASS

Historical dramas like “Vasilisa Kozhina,” about the War of 1812, have traditionally been popular in Russia.

Despite some stellar years before the global financial crisis, theaters in Russia still favor foreign films. Is there anything the state can do? VADIM NESTEROV SPECIAL TO RBTH

According to Prime Minister Dmitry Medvedev, tax advantages and state funding have not been enough to revive the Russian film industry, and the government must look to other ways to bolster domestic cinema. Medvedev made his statements at a late September meeting of the governmental committee responsible for the development of Russian film in front of new Culture MinisterVladimir Medinsky, who added that some state support will not be renewed in the future if the proportion of homegrown films in circulation in 2012 is less than 18 percent. Russian film is completely dependent on state subsidies, and the government has been reassessing its subsidy system for at least a year. On Oct. 1, 2011, amendments to the tax code came into effect allowing V.A.T. to be

charged on movie tickets; they had previously been subjected to a 0 percent V.A.T. rate. However, the State Duma reinstated the preferential rate in November 2011 following protests from film industry professionals. They may have less clout now. At the beginning of the September meeting, Medvedev clearly stated that changes would be coming: “I would like to remind you that the advantageous funding system in place for producing Russian films was introduced as an incentive to keep Russian cinematographers working in Russia. We need to acknowledge that nothing has worked.” In the years leading up to 2008, the proportion of Russian-made movies in general circulation increased considerably — from 6 percent in 2002 to almost 28 percent in 2007. But then this figure began to fall, dropping to 15.5 percent in 2010. In 2011, the portion of Russian films was 16 percent, and in the first six months of 2012,16.7 percent. But while subsidy programs haven’t worked, there is no consensus about what might. Medin-

Domestic ﬁlms in Russian cinemas

sky has been quoted as saying he would prefer to introduce a quota system — requiring Russian cinemas to show a certain number of Russian films — to maintaining the 0 percent V.A.T., but fears

that this would hurt filmgoers. Industry insider Sergei Tolsikov, executive director of the Film Fund, has suggested subsidizing tickets just for Russian films. The situation is not unique to Russia. In terms of budgets, no country in the world can hope to compete with Hollywood blockbusters. This is why so many countries, especially those with a rich cinema tradition, are doing what they can to protect their national film industry. In general, government support for national filmmakers either takes the form of grants from budgetary or nonbudgetary sources, or it entails more protectionist measures, such as introducing quotas. The leading country for state cinema subsidies is generally thought to be France, and in terms of forcibly protecting the national film market from foreign influence, the best-known example is China. In France, domestic cinema is directly supported by French viewers, who pay an extra-budgetary tax of 11 percent on all cinema tickets. The money goes straight to the national film agency and is used to finance national film production. In addition, a tax concession system is in place for companies that invest in national cinema, and bank loans allocated to filmmakers can be guaranteed by the French Institute for the Financing of Cinema and Cultural Industries. As a result the proportion of homegrown films in circulation stands around the 40 percent mark. In China, the situation is very different. Determined to preserve its national cinema tradition, China refuses to release many foreign films. Until recently, the only way into the Chinese market was to co-produce films with local cinematographers. However, following negotiations between the U.S. and China in February, Beijing increased the foreign film quota from 20 to 34 films a year. Quotas on national films also exist in former Soviet states. For example, Ukraine has a law stipulating that at least 30 percent of films shown in theaters must have been produced in Ukraine. The law, however, is ineffective — Ukraine does not make nearly enough movies to meet viewers’ demands.

Cinema Domestic film production relies on state support, but the government is cutting back

The hypercube is the first building in the innovation center.

For Skolkovo, the Future Is Cubed CONTINUED FROM PAGE 1

AntonYakovenko, the general director of the Skolkovo administration, said: “The hypercube is the first building in the innovation center. It stands all alone, so the natural environment called for solutions that ensured its autonomous operation. We aimed to keep a rigid aesthetic, both inside and outside. It is split into clear sections; we decided against fancy finishing. The interior of the hypercube will be open soon — we developed a computer game in which the character gives a walk-through of all the floors of the building.” The hypercube has seven floors. The first floor will feature the reception desk and cafés, and the second floor will house the offices of key Skolkovo partners, including I.B.M. and Cisco. The third floor will be given over to companies working on innovation projects with Skolkovo support. A vast conference hall will take up the fourth floor. The remaining three floors will most likely accommodate more offices for firms dealing with Skolkovo startups. In total, 16 companies have been authorized to establish offices in the building. Maxim Kiselev, development director of Skolkovo, believes space in the building will be in high demand:“The hypercube will be of major importance to [resident companies] and their advertising, as it will essentially serve as one giant showroom for everyone working there,” said Kiselev. “The hypercube building and

THE NUMBERS

hectares will be the eventual size of Skolkovo Innovation Center. Homes and infrastructure swuch as schools and shops for more than 21,000 permanent residents are planned for the city

companies have been authorized in total to establish offices in the flagship hypercube building. Skolkovo administrators believe the space will be in high demand.

floors is the total size of the hypercube. Offices will take up most of the space, although cafes will be located on the first floor and a conference hall on the fourth.

infrastructure are based on an innovative open space concept, and it should become a model for developing the Skolkovo ecosystem.” Andrei Potapov, head of Sputniks, LLC, which has space in the building, commented that the technology potential for the hypercube is extremely high because the area is open enough to offer a lot of freedom to rearrange space. “Plus,” Potapov said, “the first building has a lot of hidden treasures and surprises that both residents and architects will find out about only later.”

Promotion With support from the Cinema Fund, Russian films may finally have a chance at bigger distribution deals in the West

Russian Cinema Launches Charm Offensive VASILY KORETSKY RUSSKIY REPORTER

This fall promises to be a turning point in the way Russian cinema is seen by the Western market. The week of Oct. 15–20, Moscow hosts the first Red Square Screenings marathon of private screenings of Russian films for foreign distributors. The goal of the screenings is to attract more international market players to Russian films, enabling Russian filmmakers to earn money from the sales of films, not just government subsidies. Russian cinema has already generated some buzz in 2012. At this year’s Venice Film Festival, a billboard with rotating posters for Kirill Serebrennikov’s “Betrayal” was located directly opposite the Movie Palace, while ads for “Me Too” from Alexei Balabanov and “Anton’s Right Here” by Lyubov Arkus appeared daily in the press. The reason for this is simple — for the first time, the Russian Cinema Fund provided the necessary budget for producers to promote their films. SaidYelena Romanova, head of the Cinema Fund’s international

department,“It was united massive financial support; we were working on three films at once. One movie on its own doesn’t give you the leverage to get much done, but representing a complete package of films opened doors for us.” As a consequence of the marketing efforts undertaken by the fund, the films involved suddenly attracted major sales. Romanova said that the producers of“Betrayal”succeeded in signing deals with international distributor Elle Driver, while the rights for the film’s Italian distribution were hotly contested. Anton Mazurov, creative director of the Russians Are Coming agency, which is organizing the Red Square Screenings under the auspices of the Cinema Fund, described the challenges of selling Russian films in the international market this way:“Imagine the idea that each country has its movies on a giant hard disk, and all wired up to an international network.The problem is that Russian films aren’t linked to that kind of network at all. This kind of networked infrastructure is, in fact, the circuit of film festivals and movie markets.” During the Soviet era, the Russian movie business was completely detached from the rest of the world. Filmmakers survived on government handouts from the

THE QUOTE

Yevgeny Gindilis FILM PRODUCER

In the mid-1990s, there was a short period when, on one hand, the number of movies decreased, because the entire movie industry was in collapse, and on the other hand, doors opened for a small number of directors and films to get access to European financing. Then that system shut down because the renewal of post-Soviet film distribution gave rise to the idea that, with such an enormous market, it should surely be capable of financing itself.”

PHOTOSHOT/VOSTOCK-PHOTO

Russian films are now being properly promoted to the Western market. Directors hope this will give them a chance to earn money from sales.

Director Kirill Serebrennikov with actress Albina Janabaeva in Venice.

State Cinema Agency (GosKino), and producers worked with no expectation of income from screenings. The system of funding that developed under the structure of Soviet state funding was highly corrupt — films by favored companies or directors were greenlighted while others languished. Eventually the production of animated films, documentaries and low-budget art-house movies was transferred to the Minis-

try of Culture. It was at this point that the Cinema Fund appeared, gathering together eight (now 10) of the largest Russian film companies and channeling funds to them for commercial moviemaking, providing their accounting was scrupulously transparent. “This criticism stimulated contact between the Fund and the movie industry,” said Mazurov. “Neither the Ministry of Culture nor GosKino had ever maintained links with people actually work-

ing in the film industry. And then people appeared who started to communicate and get experience — and cinema began to grow with them.” The result of this dialogue was the decision of the Fund to expand from just making movies to funding their promotion and sales. “The whole way that movie rentals are organized in Russia cuts cinemas off from any movie aimed at slightly older audienc-

es that might be interested in films that raise more questions,” said producer Yevgeny Gindilis. “They have that kind of audience in Europe; so independent films in Europe have a much better chance than in Russia. You can see that with a film like Alexei Fedorchenko’s ‘Ovsyanki’ (Silent Souls), which did well at the box office in Europe.” Until now, the more sophisticated European moviegoer has been aware of just a trio of names in Russian filmmaking — that is, Andrei Tarkovsky, Alexander Sokurov and Andrei Zvyaginstev. Movies that are aesthetically beyond that trio drop off the distributors’ radar. They’re hard to classify, hard to position and, as a result, hard to promote. “Distributors — I mean those who buy movies for screening in their own country or part of the world — know very little about what’s happening in Russian moviemaking,”said Mazurov.“The history of Russian filmmaking is the history of an unsellable product”. The organizers of the Russian international movie market see the answer in establishing communications between the major players. Said Mazurov, “It’s the only way that Russian producers can find out what Western distributors are looking for.”

Special Report Agriculture November 21