Russia And Greater China

Tuesday, December 18, 2012

SPECIAL REPORT

RUSSIA

AND GREATER CHINA

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

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Cool place to be for festivities

Muscovites prepare for grand celebrations PAGES 12-13 LORI/LEGION MEDIA

Purchasing power

Artistic investment

Nations aim to boost bilateral trade

Consumer spending is growing thanks to high income levels

Art is fast becoming a lucrative venture

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> PAGE 14

> PAGES 4-5

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Close ties

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2 Tuesday, December 18, 2012

RUSSIA AND GREATER CHINA

Year to remember 2012

There was plenty of drama for the nation to look back on and ponder

March 4 Putin wins elections

REUTERS/VOSTOCK-PHOTO

February 21 ‘Prayer’ leads to stiff punishment

May 6

June 16 Euro football failure

Clamping down on protests Luzyanin, 36, was sentenced to fourand-a-half-years in prison. Other investigations continue. The May 6 rally also led to a law that dramatically increases fines for those who participate in, or organise demonstrations that have not been approved by the authorities. Opposition leaders could face up to 10 years in prison if convicted.

The national football team’s elimination at the group stage of the European Championship 2012 was one of the year’s biggest disappointments.

The team failed to progress beyond the weakest group in the tournament, losing to Greece. Captain Andrei Arshavin further angered fans saying: “Your expectations - it’s your problem.” Russia’s new coach, Fabio Capello. has not called up Arshavin f o r t h e Wo r l d C u p 2014 qualifiers.

ITAR-TASS

A wave of protests that began after parliamentary elections in December 2011 continued after Vladimir Putin was elected president. A rally on May 6 ended with clashes between protesters and police. Over 400 were detained and 17 arrested and accused of rioting and attacking law-enforcement officers.

On November 9, businessman Maxim

AP

AFP/EASTNEWS

The feminist punk rock band Pussy Riot held an impromptu “punk prayer” in the Cathedral of Christ the Saviour in the heart of Moscow that included chants such as “Mother Mary, put Putin away”. Three members of the band were arrested in March. The other participants of the “prayer” were wanted on charges of disorderly conduct motivated by religious hatred.

In August, Nadezhda Tolokonnikova Maria Alekhina and Yekaterina Samutsevich were found guilty by a Moscow court and sentenced to two years’ imprisonment. In October, the Samutsevich’s punishment was made conditional. The case drew unprecedented attention inside and outside the country and led to a surge of accusations that Putin and the Russian Orthodox Church influenced the court case.

Opinion polls in Russia suggest a majority backs the sentence, however. A poll by the independent Levada research group showed only 6 per cent of respondents were sympathetic with the women, and 51 per cent said they found nothing good about them, or felt hostility towards them.

Prime Minister Vladimir Putin won the presidential election in the first round with more than 63 per cent of the vote.

Gennady Zyuganov, the veteran communist leader, followed with 17 per cent.

A US$300 million network of webcams and as many as 500,000 independent observers were deployed to ensure electoral transparency following anger at voting violations in December’s parliamentary poll.

Still, observers from Russia and from the Organisation for Security and Cooperation in Europe reported irregularities at many polling stations.

Putin is now serving as president for another six-year term.

After his inauguration in May, President Putin fulfilled a “gentleman’s agreement” with his predecessor.

Ex-president Dmitry Medvedev was appointed prime minister.

RUSSIA BEYOND THE HEADLINES’ SUPPLEMENTS AND SECTIONS IN ASIA: GET THE BEST STORIES FROM RUSSIA EACH MONTH IN YOUR FAVOURITE NEWSPAPER In Global Times (China)

In Mainichi Shimbun (Japan)

“RUSSIA IS FORMING AN ENERGY RING IN ASIA-PACIFIC” ezhong.ru

In JoongAng Ilbo (South Korea)

In The Economic Times (India)

“TAKING STEPS TO REVIVE THE GLORY OF RUSSIAN FOOTBALL” roshianow.jp

“PLAYING THE POTASH GAME: CHINA AND INDIA IN SEARCH OF CHEAP FERTILISERS” indrus.in

“NORTHERN SEA ROUTE: LINKING RUSSIA AND KOREA ” rbth.asia

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

Tuesday, December 18, 2012 3

RUSSIA AND GREATER CHINA July 1 July 27 – August 12

August 22 Accession to the WTO after 18 years

Late surge at the Olympics

AFP/EASTNEWS

The national Olympic team was a major disappointment during the first half of the Olympic Games in London.

However, the athletes recovered close to the end of the Games, winning several gold medals. Russia finished in

Moscow doubles its territory The city’s population density dropped from 10,700 people per square kilometre to 4,600 overnight. The aim of the move is to relieve traffic congestion and allow the urban area of 20 million people to develop harmoniously, said Moscow Mayor Sergei Sobyanin. Moscow is among the 10 largest cities in the world with a population of more than 10.5 million.

One of the economic highlights of 2012 was Russia’s accession to the World Trade Organisation after 18 years of talks.

The main stumbling block was Russia’s reluctance to cut import duties and stop supporting its producers. Agreements on the majority of issues were reached over the course of a few years, except with regard to the vehicle industry, agriculture and agricultural machinery.

Now the government will cut auto import duties to 15 per cent over the next seven years.

The government also cut duties on agricultural machinery from 15 per cent to 10 per cent.

Russia is also cutting duties on just about every kind of agricultural product except beef.

AFP/EASTNEWS

Moscow’s land area doubled on July 1, after being enlarged by 150,000 hectares from neighbouring territories along its southwestern borders. The expansion plan was brokered by then-president Dmitry Medvedev in 2011.

“Big Moscow” includes the territory of the two cities in the Moscow region, Shcherbinka and Troitsk, and 19 smaller residential areas.

fourth place behind the US, China and Britain.

The volleyball team became the nation’s heroes after Vladimir Alekno led his side to a 3-2 victory over Brazil.

The London Paralympics were most successful for the Russians, however. The nation won a total of 102 medals and finished in second place b e h i n d China.

September 7-9

September 18

Country takes Apec helm in Vladivostok

Mathematician wins Shaw Prize nomena,” Shaw Prize council member Yang Chen-ning explained.

Kontsevich’s work is said to be “related to the fundamental mathematical structure of the universe”.

The Shaw Prize was established in 2002. It began honouring individuals every year in 2004.

The prize is named after the 104-yearold Hong Kong media tycoon and philanthropist Run Run Shaw, and it is often referred to as the Nobel Prize of Asia, although it recognises scientists from across the globe.

October 14

October 22

November 6

Return to direct gubernatorial elections

Rosneft in deal of the year

Defence minister in shock dismissal

viet Union, despite the fact that it shortens the journey from Asia to Europe by several days. Another logistical project is the Trans-Eurasian railway, a track linking Western Europe to Southeast Asia via Russian territory.

The main agreement reached would see regional development based on a communiqué signed in Vladivostok after the summit, however. Leaders recognised that the priorities of the world economy are gradually shifting towards Southeast Asia, which will soon be the focus of goods and cash flows.

© RIA NOVOSTI

reintroduce elections for Russia’s 83 provincial governors.

Candidates from the ruling United Russia Party won all five races, reaffirming the party’s dominance across the national political landscape. Independent and opposition candidates targetted Russia’s regional elections next year.

ITAR-TASS

Russia held its first gubernatorial vote in eight years in October. Direct elections of governors were abolished in 2004 at the behest of Vladimir Putin, who was president at the time.

After widespread protests across Russia earlier this year, the Kremlin promised to ease restrictive electoral laws and

Rosneft’s buyout of BP’s shares in TNKBP was the biggest mergers and acquisitions deal of the year.

The state-owned oil company offered US$17.1 billion plus 12.86 per cent of Rosneft shares. The value of the deal was US$27 billion. Rosneft now wants to buy out Russian shareholders.

TNK-BP was one of the most controversial companies in Russia. It was set up in 2003 as a joint venture of the Tyumen Oil Company (TNK) and BP. Controversy erupted in 2008, when partners called for CEO Robert Dudley to quit.

© EDALCOCK / MYOP DIFFUSION

The Shaw Prize in Mathematical Science 2012 was awarded to Professor Maxim Kontsevich “for his pioneering works in algebra, geometry and mathematical physics and, in particular, deformation quantisation, motivic integration and mirror symmetry” .

Kontsevich, who was born in Russia in 1964, is a permanent professor at the Institut des Hautes Études Scientifiques near Paris.

“Mathematical physics is a science that uses mathematical language to describe and understand physical phe-

Russia became the president of AsiaPacific Economic Co-operation for the first time in 2012.

The climax of the presidency was the Vladivostok summit in early September. The four key topics discussed were energy efficiency, exchange of technologies, food security, and logistics, which was particularly topical.

Vladivostok is Russia’s eastern gateway. Foreign ships started using the Northern Sea route for the first time after the summit, a route that was mostly ignored since the collapse of the So-

The sudden dismissal of defence minister Anatoly Serdyukov (seated, left) sent shock waves in Russia.

He was fired after a corruption scandal erupted.

The minister’s dissmisal triggered major corruption probes. The investigations also exposed high-level officials, such as former agricultural minister Yelena Skrynnik.

Meanwhile, new Defence Minister Sergei Shoigu (standing, left), the former emergency situations minister and governor of Moscow, started a major reshuffle in the top military circle, and introduced changes to Serdyukov’s army reform, which is still hugely unpopular in the Russian armed forces.

4 Tuesday, December 18, 2012

RUSSIA AND GREATER CHINA

Nations aim to boost trade ties

T

rade between Russia and China continues to reach new heights, but differences between the two nations have seemingly become more apparent in the past year.

In March, Vladimir Putin was elected president of the Russian Federation, and will rule the country for the next six years; the Chinese Communist Party’s 18th Congress chose the country’s new leadership.

What will be this year’s legacy for these two nations?

More than anything else, the past 12 months have strengthened China’s status as Russia’s principal trade partner.

Last year, Russia’s trade with China totalled US$83.5 billion.

This year, that figure may well break US$90 billion, implying that the target of hitting US$100 billion by 2015 might be achieved early.

The second piece of news is that Moscow and Beijing have started to move towards trade diversification.

Russia has long grumbled about the dip in its share of hi-tech exports to China. It now looks as if the leadership is stumbling towards a solution.

As President Putin wrote in the People’s Daily, “we need to be talking about a technological alliance between [the] two countries”.

As part of this new initiative, the Skolkovo innovation city signed a framework agreement with Zhongguancun, China’s hi-tech hub.

The joint development of long-range aircraft is slated to be a major project for the two nations.

The third successful outcome is the intention to significantly increase investments. During Putin’s June visit, the China Investment Corporation and the Russian Foundation for Direct Investment signed an agreement for the launch of a joint US$4 billion fund, with the company’s offices in Hong Kong.

However, there are lingering disputes over energy.

The Skovorodino-Daqing pipeline, launched in 2010, turned into a symbol of controversy last year due to pricing arguments between Russia’s Rosneft and Transneft, and the China National Petroleum Corporation.

Early this year, the conflict wiped out US$3 billion for the Russian side, to Moscow’s chagrin.

Russia and China should realise that it would be better to scrap the pipeline and stick to trade by oil tanker, sell liq-

We need to be talking about a technological alliance between [the] two countries PRESIDENT VLADIMIR PUTIN

uefied natural gas. The second area of concern is the disagreement over investment activity.

Despite the launch of the fund, and regional co-operation projects being signed in 2009, there have been few tangible results.

Moscow and Beijing should prepare documents better, while the bureaucrats get on with implementing projects, rather than organising official visits that result in a stack of signed, but dormant documents.

There is a desperate need to take action on protecting intellectual property. This issue scuppered last year’s planned US$4 billion purchase of Russian Sukhoi SU-35 fighter jets by China.

The same stumbling block could plague other hi-tech projects.

Moscow and Beijing need to use this window of opportunity to solve these difficulties.

Strengthening ties Premier Wen Jiabao said Russia would remain a priority for China.

Relations between Moscow and Beijing are the best ever, Prime Minister Dimitry Medvedev said this month.

Chinese tourists are going to Russia in greater numbers, thanks to the promotional campaign, “Year of Russian Tourism in China”.

In April, Russia and China conducted military exercises, strengthening ties between the two countries.

Visitor numbers exceed all expectations, officials say posed the establishment of a working group to select, monitor and evaluate investment projects that could be spurred by public-private partnerships, credit guarantees and personal supervision.

Only a few projects have actually materialised. There was much ado last summer when two Chinese corporations announced plans to invest US$3 billion in a resort in the north Caucasus. The head of the Northern Caucasus Holiday Resorts company, Akhmed Bilalov, started to expand his construction plans, despite warnings that it was premature from one of the investors, the head of the Dalian Wanda Group and China’s third-richest man, Wang Jianlin.

Nothing substantial is likely to emerge from the agreement. The Chinese are

Tatiana Schenkova Russian and Chinese tourism officials are delighted with a surge in visitor numbers between the two countries.

Russia hosted 870,000 Chinese tourists this year, a 40 per cent jump that “exceeded all expectations”, says Alexander Radkov, head of the Russian federal agency for tourism, Rosturism.

More than 100 events, promoting Russian tourism, were staged in China this year.

“It is no secret that the Chinese leadership urged the regions to encourage trips to Russia and send more people there, so this is a joint triumph,” says Ivan Vvedensky, chairman of non-profit-making organisation World Without Borders.

Chinese tour operators say Russia attracts many older tourists nostalgic for Soviet-Chinese friendship.

“About 70 to 80 per cent of the tourist groups that go to Russia are people older than 50,” says a China Youth Travel Service spokesman.

Despite Russia being the centre of attraction at a tourism forum in Shanghai last month, young people showed greater interest in going to the United States and Europe.

Russian officials are keen to see Chinese companies contribute to the federal programme, “Development of Internal and Inbound Travel in Russia”, which lasts until 2018. Rosturism’s deputy head Evgeny Pisarevsky has pro-

TRADE not short of investment destinations – from Australia to Brazil, the United Arab Emirates to Kazakhstan and Africa. Russia may be way down the list. Even so, six agreements were signed at the tourism forum. The Yaroslavl Region signed agreements with the Jiangxi and Guangdong provinces, Vladinvesttour Group signed one deal to assemble Chinese buses, and World Without Borders partnership signed a deal with China UnionPay. Hopefully, these agreements will result in something tangible.

ELENA POCHOTOVA

Moscow and Beijing hope to learn from past successes and failures, writes Alexandr Gabuev

There has been a surge in the number of Chinese tourists visiting Russia.

Tuesday, December 18, 2012 5

RUSSIA AND GREATER CHINA Living in ignorance of a great neighbour

Chinese investors bankroll western Siberian coal mine Anton Olshannikov RBC Daily

In November, China agreed in principle to buy 24 Russian-made Su-35 fighters. It will a take at least a year to finalise the deal.

Alexandr Gabuev

KOMMERSANT

PHOTOSHOT/VOSTOCK-PHOTO

Moscow’s innovation hub Skolkovo and Beijing’s hitech zone, Zhongguancun, signed an agreement that will help with the exchange of ideas.

Chinese investors are to finance their first coal mine in Russia at the Karakanskoe deposit in Kuznetsk Basin, western Siberia. The project gained approval at the ninth round of the Russia-China Energy Dialogue.

Russia’s Karakan-Invest company plans to build an open-pit coal mining facility with China Coal Mine Construction Group and its subsidiary Kitayugleshakhtostroi-Sibir in the KarakanWest area in the Belovsky district of Kemerovo.

The company is developing the Karakan coal and energy cluster, and operates a coal pit yielding almost 3 million tonnes a year and containing reserves of 305 million tonnes. The mine, which is scheduled for completion by mid2015, will produce 3 to 4 million tonnes a year. Next year will see the start of design work (Kuzbassgiproshakht is the general designer), the opening of a credit line from China’s Development Bank and 30 months of construction.

The Chinese side will invest an estimated 700 million yuan (HK$862 million) in tunnelling work and 1.5 billion yuan in turnkey completion of the mine.

The Karakanskoe deposit is expected to host an infrastructure, including a railway costing 3 billion roubles (HK$11.92 billion), water pumping and

China invests in Russian coal. power supply facilities. The new mine will be wholly owned by Karakan-Invest. Coal supplies to China will start next year. Karakan-Invest has opened negotiations with Shenhua, one of China’s largest coal-mining companies and a leader in deep coal processing, to use Karakan coal at a liquid fuel plant.

“The Atlantic segment of Russia’s coal supplies to Europe will become increasingly limited by competing deliveries of LNG from Qatar and of thermal coal from the United States,” Karakan-Invest chairman Georgiy Krasnyansky says.

Beijing seals nuclear deal Moscow will build the third and fourth units at China’s Tianwan nuclear power plant (NPP) after Premier Wen Jiabao and Russian Prime Minister Dmitry Medvedev sealed the deal in Moscow on December 6.

The talks were held within the framework of the 17th inter-governmental meeting.

The project has been touted as the largest energy deal in the past two years.

Russia will grant a US$2.5 billion loan to China as part of the agreement.

The first two reactors at the Tianwan plant are already operational. The plant has four uranium enrichment units built with the assistance of Russian specialists.

Two more reactors at Tianwan will enable China to increase the role of nuclear power in its energy undertakings, and achieve its goal of a 10 per cent share of global nuclear power output.

Negotiations to build the new NPP reactors were lengthy because China took a six-month break to improve security in its nuclear power industry following the Fukushima disaster.

“The discussion was mainly concerned with the degree to which Russian specialists, Russian technology and Chinese contractors would be involved in the project,” says Anton Khlopkov, director of the Centre for Energy and Security Studies in Moscow.

XINHUA

Natalya Kasho, VOR

China is hoping to boost its nuclear power capacity.

Two more reactors will help China increase the role of nuclear power in its energy undertakings “Chinese industry and engineers have accumulated considerable expertise in building nuclear power plants in recent years.

“That’s why the Chinese negotiators insisted that the share and role of their

specialists and industry in nuclear projects should be considerably expanded.”

The Tianwa nuclear power plant is believed to be China’s most advanced complex.

Russia will export 15 million tonnes of oil to China this year, 50 per cent more than last year.

Both sides have confirmed plans to double this volume. It also appears that all oil-pricing issues have been resolved.

Pricing was a source of tension in previous rounds of energy talks.

Defining a price for Russian pipeline gas topped the agenda at the talks, though no breakthroughs were achieved.

Gennady Shmal, president of the Russian Union of Oil and Gas Industrialists, says that another political signal is needed to ensure progress.

“Given huge gas reserves in Russia’s Yakutia and Sakhalin, it is possible to hope for a mutually beneficial compromise,” Shmal says, touting China and the Asia-Pacific countries as possible sales markets.

Alexei Miller, chairman and CEO of state-controlled Russian gas giant Gazprom, says: “We have a new proposal [on the price of natural gas supplies], which should be of interest to our Chinese partners.”

According to Miller, Gazprom experts analysed the optimisation of gas supply through the Altai pipeline from western Siberia to northwestern China. The analysis showed that the core value of the supply of Russian gas to China can be reduced.

Experts predict a spate of trade deals worth US$90 billion will be clinched between Russia and China by the year’s end.

Xing Guangcheng, a researcher in Russian studies at the Chinese Academy of Social Sciences, says the meeting’s success indicates that there will be more co-operation in coal and electricity supply in the future, in addition to oil and natural gas.

Stability and sustainability are key features of the Sino-Russian relationship, despite leadership changes in both countries.

As a nation we know remarkably little about China. The problems begin with information gathering. Leading news agencies, such as Itar-Tass and RIA Novosti, have press centres in Beijing with a staff of only three to four people. Meanwhile, Western press agencies maintain news bureaus in Beijing staffed by 15 to 20 people, and many have correspondents based in provincial centres as well.

Experts at McKinsey comment on the weak coverage of China in Russian media compared with the world’s 10 leading economies. Most world newspapers covered the change of government in China on their front pages; in Russia, it was barely mentioned.

The list of experts on China in Russian universities does not even number 200 (there are more than 15,000 in the United States), only 50 of whom continue to actively produce academic papers on China. The average age of these experts is advancing, while the salary of a research fellow is unlikely to top US$500 per month. The result is that younger specialists split their time between three or four institutes at once, barely undertake any research, or don’t go into research at all. Russia does not have one single teacher on Chinese finance, law, military issues, and the list goes on.

This entire grouping produces just a few dozen academic articles, and perhaps a dozen monographs each year, the level of which, with some rare exceptions, is barely worthy of comparison to the hundreds of excellent pieces about China to be found in the Englishlanguage press.

In the absence of state support and funding, it is the Chinese themselves who are sponsoring the publication of many books in Russian about China.

This can be classed as a major reason behind the glowing commentaries of many Russian sinologists regarding the cloudless future relationship with Russia’s great eastern neighbour.

State sinology is not doing much better, even in the secret intelligence units.

During the Russo-Chinese joint military exercises, Sea Interaction 2012, the entire linguistic support was provided by about 200 young Chinese officers, all of whom spoke impeccable Russian.

The Russian side mustered just three interpreters. Big business is in no hurry to increase investment in understanding a country which will soon become the largest market for Russia’s products.

The Rosneft fiasco, involving an energy pipeline to China that lost US$3.5 billion, and Gazprom’s many tortuous years trying to access the Chinese gas market, illustrate state companies’ ineffectiveness and a lack of expertise on China. We’ve been stuck in a vicious circle for years, in which sinologists moan about the lack of money, and customers, such as state firms and businesses, wail about the lack of available experts and ideas.

6 Tuesday, December 18, 2012

RUSSIA AND GREATER CHINA

Pacific Andes discusses options for deal, writes Svetlana Mentyukova

H

ong Kong seafood processing giant Pacific Andes International Holdings, which is suspected of illegally owning Russian fishing companies, says it is in talks with Russkoye More – Dobycha (RMD) to find “various options for potential fishing co-operation in Russia”.

The company did not specify details of its negotiations with RMD. A statement from the company and its subsidiary, China Fishery, says a joint venture with the Russian firm is a possibility, but adds that “negotiations are preliminary, and it’s still possible that a final agreement won’t be reached”.

The joint-venture option was reportedly approved at a meeting chaired by Russia’s First Deputy Prime Minister Igor Shuvalov.

This would settle the conflict with Pacific Andes, which is suspected of poaching pollock in Russia’s exclusive economic zone.

ALAMY/LEGION MEDIA

Talks to resolve conflict A joint venture is expected to resolve the fishing controversy involving Pacific Andes.

BUSINESS The group’s supply of fish is in compliance with existing Russian law, and is sustainable

The Federal Antimonopoly Service says the Russian side should be the controlling shareholder.

RMD has confirmed that negotiations are under way over the acquisition of two Russian fishing companies, Turnif and Intraros, thought to be affiliated to Pacific Andes. Pacific Andes International Holdings is the world’s largest producer of fish products. Last year, it reported HK$923 million profit from sales of HK$14.2 billion.

Pacific Andes caused an uproar last year when it claimed that it controlled 60 per cent of Russia’s pollock catch, prompting the Federal Fisheries Agency to ask law-enforcement agencies to deal with foreign companies fishing in Russia’s exclusive economic zone.

A government commission monitoring foreign investment in strategic companies decided that Pacific Andes and

China Fishery should sell their Russian fleet to Russian companies. Although the names of these companies were not revealed, market players say they include members of the Pollock Catchers’ Association.

Analysts say Pacific Andes released a statement about the negotiations because of its importance to the company. They believe a protracted silence from the company has hurt its share price. The market capitalisation of Pacific Andes and China Fishery on the Singapore Stock Exchange has fallen 25 per cent and 40 per cent, respectively, since the start of the year.

There was a tepid response to the statement with prices rising fractionally. The company has denied allegations that it had violated laws governing foreign companies operating within Russia’s borders.

Pacific Andes said in a statement that “the group’s supply of fish is in compliance with existing Russian law, and is sustainable”. It added that “the group ... will revisit the legal position with lawyers and will try to seek further clarifications with [Russian authorities]. The group treasures its long-standing relationship with the Russian fishing industry, and it is the group’s aim to continue this relationship in compliance with applicable legislations and in line with policies set by Russian authorities”.

Russia’s total annual catch exceeds 3.5 million tonnes, with the Far East basin accounting for two-thirds of the total. Pollock is the number one catch in Russia. According to the Food and Agriculture Organisation of the United Nations, Russia accounts for about 40 per cent of global frozen pollock exports and one-third of pollock roe exports.

Fighter deal with Beijing is risky business Ilya Kramnik VOR Beijing has reached a preliminary agreement with Moscow on the purchase of 24 advanced Sukhoi Su-35 fighter jets, according to media reports.

Although the deal could open doors to the global market for the Su-35, the agreement with China is fraught with risks.

The Su-35 fighter, or more precisely the Su-35BM, has become the latest and possibly the last repeat of the T-10S platform, whose first offspring was the famous Sukhoi Su-27 fighter.

This machine and its modified ver-

sion, the Sukhoi Su-30, brought worldwide fame to the Sukhoi name. T10-based aircraft have become the best selling fighters of the past 20 years.

Remarkably, it was China that paved the way for the Su-27’s big break: the first contract for the delivery of 20 Su27SK fighters was signed in 1991, followed by a contract for 16 more units in 1996.

Then followed an agreement to supply almost 100 kits for licensed assembly. After that, China started buying the Su-30MKK aircraft.

Contracts with China were followed by agreements with India, Malaysia, Vietnam, Algeria and others. But the suc-

cess of the Russian fighters came at a price.

The licence to assemble the Russian fighter led to China copying it and eventually launching production of a “localised” plane code-named J-11. While the Chinese knock-off is noticeably inferior to the original – in the service life of the engines and avionics – the copying process has improved China’s military aircraft industry capabilities. This has accelerated the modernisation of China’s air force, which in the early 2000s had lots of ancient fighters, such as the J-6 – a copy of the Soviet MiG-19, dating back to the 1950s.

China has expressed interest in the

RGC wishes all our readers happy holidays. We will be back on

Su-35, whose capabilities approach those of fifth-generation fighters, for some time. But the fate of the Su-27 in China is a cautionary tale for the Su35. Nobody can guarantee there will be no attempts made to copy the Russian fighter. The potential damage could only be partially offset by a purchase of at least 50 planes, which would make copying pointless, while enabling the manufacturer to use the proceeds to develop more advanced aircraft. A batch of 24 planes is insufficient to outweigh the risk of seeing another Chinese clone in the sky in 10 or 15 years’ time.

Another way is to supply China with

February 26

a simplified version of the Su-35. Quite possibly this is what will be done: the reported price of US$1.5 billion for the 24 aircraft doesn’t seem out of line at all, as “top” versions of T-10-based fighters have been selling for more than US$100 million apiece.

Given that copying would take at least five to seven years, supplying a simplified version could be an acceptable option. In the case of China, the optimal course of action would be to curtail supplies of Russian military hi-tech production there as much as possible.

The military can be compensated for potential losses with domestic orders instead.

Tuesday, December 18, 2012 7

RUSSIA AND GREATER CHINA

Passage can lead to profits Gazprom tanker opens Arctic route, writes Sergei Ivanov

ENERGY

PRESS PHOTO

Icebreakers have to escort the tanker across the cold waters.

C

ompanies transporting gas from the North Sea to north Asia can save US$3 million using the Arctic passage instead of the Suez Canal. That was made possible after the tanker Ob River became the first ship to transport natural gas from Norway to Japan last month.

The journey from the Hammerfest Snohvit liquefied natural gas (LNG) facility in Norway to the Japanese utility, Kyushu Electric Power, took 20 days to complete, three weeks faster than the traditional route across the Mediterranean Sea, the Suez Canal and around Asia. The tanker completed a test trip across the Arctic sea route without any gas. Last month, it did so with the gas supply.

“The trip was completed accident free and in accordance with the timetable,” Russian gas company Gazprom says. The company had been preparing for this trip for more than a year.

Gazprom Marketing and Trading, a unit of Gazprom, chartered the ship

Companies can save US$3 million using the Arctic passage instead of the Suez route from the Greek Dynagas company with an international crew of 40.

“It’s an extraordinarily interesting adventure,” Dynagas commercial director Tony Lauritzen told BBC News. “The people on board have been seeing polar bears on the route. We’ve had the plans for a long time and everything has gone well.”

Lauritzen said a key factor in the decision to use the northern route was the record on melting ice in the Arctic.

“We have studied lots of observation data – the icy conditions are becoming

more and more favourable for transiting this route. You are able to reach a highly profitable market by saving 40 per cent of the distance, that’s 40 per cent less fuel used as well.”

The Ob River can carry 150,000 cubic metres of gas, which is chilled under pressure and turned into a liquid.

Three Russian nuclear-powered icebreakers – 50 years of Victory, Rossya and Voigach – accompanied the tanker on its voyage.

“The two trips of the Ob River have fully proved the technical and economic viability of the Arctic route for international LNG supplies,” a Gazprom spokesman says.

“With high-quality icebreaker protection, shorter delivery times, increased volumes of supply and no risks of military conflicts and pirate assaults it could be attractive and a safer solution for international trade.”

Chartering an LNG tanker can cost US$150,000 per day. Companies transporting gas from the North Sea to north Asia can save up to US$3 million using the Arctic passage instead of the Suez route. Having icebreakers would cost more.

The Arctic route can be navigated for just a few months a year. But scientists say with climate change and a decreasing ice level, it is likely the length of the sailing season could be extended and traffic across the Arctic sea route could grow rapidly.

Scientists announced in September that Arctic sea ice had dropped to 3.4m square kilometres – 50 per cent lower than the average recorded from 1979 to 2000.

COMMENT EMMANUEL GOUT Energy Analyst

Nuclear power continues to be a necessary evil Three Mile Island, Chernobyl and Fukushima conjure up terrifying images of radioactive materials threatening the lives of hundreds of thousands of people. The controversy surrounding nuclear power will continue to rage. Opponents will continue demanding that mankind end its dubious flirtation with nuclear power.

But, what are the alternatives? Solar, wind and other alternative energy sources simply cannot power the world, so it seems obvious that nuclear power is a necessary evil.

Energy demands in Europe will surge more than 33 per cent, according to the International Energy Agency. The agency says that, following the German decision to terminate its nuclear power programme by 2020, electricity costs in Europe will be one to five times higher than in the United States by 2030. It adds that Saudi Arabia, the world’s biggest crude oil producer, will build two nuclear power plants in the near future.

While the debate rages, two facts are clear about nuclear power: It does not cause global warming, and the human factor involved in its operations is the only design flaw.

Human error was blamed for Three Mile Island, Chernobyl and to some extent Fukushima.

Fukushima gave a chilling reminder of the dangers posed by the nuclear industry. Nevertheless, there was human error and the tsunami risk was underestimated.

It is important to understand what people are worried about, and that is the reason why all countries using nuclear power, mainly Europe and Russia, performed stress tests on all their plants after Fukushima – Russia extended its stress tests to terrorism.

The conclusions were published and all operators had to invest millions to meet security needs. It could also be useful to consider the formation of a worldwide authority to deal with security and safety issues, with strong parameters and real attention to the concerns of the population. Safety parameters are in constant evolution.

The real challenge for the nuclear industry lies in ensuring that a clear picture is given to the population so that

they can understand what is really going on. Clashes between governments can lead to horrendous misunderstandings: for example, the situation in Lithuania where the government, which wanted to promote its nuclear power plants, accused neighbours of building unsafe power plants. As a result, a recent referendum voted against nuclear energy.

What will happen with Bulgaria, where there is so much confusion about this topic and its government appears to be coming under pressure from the United States and Brussels to reduce its energy reliance on the Russians.

Russia’s state nuclear energy corporation Rosatom, which signed a deal few

Fukushima gave a chilling reminder of the dangers posed by the nuclear industry years ago to build the Belene nuclear plant on the River Danube, is demanding compensation after Bulgaria pulled the plug on the project.

Bulgaria is a “complex country” for foreign investments and Rosatom is not the first international company to encounter such problems.

Despite greater scepticism following the Fukushima disaster, the list of countries promoting nuclear energy is growing with Britain, Poland, the Czech Republic, Slovakia, India, Turkey, China, South Africa, Argentina, Saudi Arabia, Jordan and a handful of African countries. Rosatom is busy with 38 new projects.

French company Areva, Westinghouse from the US and the RussianCzech alliance, Skoda-Rosatom, are the three bidders for a project to build two new reactors at the Temelin power station in the Czech Republic.

The Fukushima disaster marked the end of low cost nuclear energy. Nevertheless it reinforced the policy of safety and security levels for the different players.

8 Tuesday, December 18, 2012

RUSSIA AND GREATER CHINA

Purchasing power Consumer spending is growing rapidly as income levels rise, writes Ben Aris

C

ontrary to popular belief, Russia is more of a consumer-oriented economy than being reliant on oil and gas. Services and consumer goods sectors are now outstripping energy as the main drivers of growth.

Financial analysts say growing investment opportunities in those sectors could offset the continuing consolidation of energy assets by the state.

“The Russia story now is like the tortoise and the hare – a static energy sector, but very fast-growing consumer and service industries,” says Chris Weafer, chief strategist at Sberbank Investment Research.

Steady growth in disposable income and investment capital, along with more government support and the advantages of membership in the World Trade Organisation, will lead to greater growth in non-energy sectors, Weafer says.

Russia became the biggest market in Europe for milk and children’s toys last year, markets that were worth US$22.7 billion in sales. Russia is now on course to become the biggest market in Europe for clothes, footwear, accessories and advertising worth US$76.8 billion in sales.

Russia’s consumer market has reached critical mass and, thanks to steadily rising incomes, is poised to become the biggest consumer market for a wide range of products in the build-

ECONOMY

Rising wealth levels over the last decade have turned Russia into a middle-class country.

Already the 11th largest consumer market in the world, according to Euromonitor International, and in the top two or three for most sectors in Europe, Russia continues to climb the rankings. GDP will expand by 3.5 per cent to 4 per cent this year, according to the World Bank.

The flood of petrodollars primed the pump and, ironically, the state’s big presence in the economy provides an effective “trickle down” mechanism.

Russia’s per capita income is the fastest growing of any major emerging market in the world over the past few years. It reached US$21,350 last year (on a purchasing power parity basis), according to the World Bank, well ahead of Brazil (US$11,720), China (US$8,440) and India (US$3,650).

With very little debt, the lion’s share of Russians’ income is disposable.

And, since the advent of consumer credit in 2001, shoppers can multiply the power of their income many times over by borrowing.

It seems that, after 70 years of deprivation, Russians are now taking full advantage of their growing prosperity.

up to 2018 when it will become the biggest consumer market in Europe.

“Rising wealth levels over the past decade have turned Russia into a middle-class country for arguably the first time in its history,” says Citigroup’s chief Russian strategist Kingsmill Bond.

Russian incomes have risen an astonishing 16-fold over the past decade, from an average monthly income of about US$50 under former president Boris Yeltsin to just under US$800 under President Vladimir Putin. This figure puts the country into the middle-income bracket, according to the last UN Development Agency report. If former United States president George W. Bush had delivered the same sort of increase during his eight years in office then US average per capita income would have increased from US$35,082 in 2000 to US$561,312 by the start of this year.

“In 2004, the government made the principle decision to hike taxes on energy and slash them on everything else.

Today, Russians enjoy some of the lowest income and corporate taxes in Europe,” says Clemens Grafe, managing director of new market economics for Goldman Sachs in Moscow. Focusing on the price of oil is a red herring, he says. The state is using its oil and gas windfall to subsidise the real economy, which has fuelled a decade-long shopping spree.

UBS ranks Moscow shoppers 41st globally for purchasing power.

Growing prosperity fuels spending spree Vladimir Ruvinsky

“This comes as a positive surprise for retail trade in October and supports our expectation of acceleration in retail trade growth from 4.4 per cent year-on-year in September to 5.0 per cent year-onyear in October,” says Evgeny Gavrilenkov, chief economist at Sberbank CIB. The consumer-borrowing binge is spilling over into other sectors of the economy directly connected to shopping. Supermarket chains are among

AP

Despite the sluggish global economy, Russia is experiencing a shopping boom driven by soaring consumer credit. Russia’s major retail centres are enjoying high sales volumes, comparable to anywhere in the world.

It seems that after 70 years of deprivation, Russians are taking advantage of growing prosperity to stock up on some of those luxuries that most in the West take for granted.

In October, Russia’s banking sector surprised once again when retail lending growth accelerated to 43 per cent year-on-year – well into what the Central Bank of Russia deems “overheating” territory.

Companies and banks were in the front line following the collapse of Lehman Brothers in 2008, but the Kremlin worked hard to shelter the population from the fallout, bailing out troubled banks and propping up state-owned companies. Wages have continued to rise throughout the crisis, while unemployment is at a 20-year low of 3.8 per cent.

The average Russian has no debt to speak of – everyone was simply given their apartment by the state in 1991 and such things as mortgages and credit cards have only just taken off – and the average Russian is free to borrow heavily, most of their income being disposable. Retail loan growth speeded up in October, surprising economists who were expecting it to slow in the second half of this year.

On New Year’s eve children are waiting patiently to receive their gifts.

the first to benefit. Spending on food is among the most resilient, even in tough times. Most leading supermarkets are reporting revenue growth of up to 33 per cent year-on-year for 2012.

Car sales have also been strong, increasing 13 per cent in the year to date, according to the Association of European Businesses. Russia is on track to become the largest car market in Europe in the next five years.

Spending is also driving investment into commercial real estate. Last month, Jones Lang LaSalle ranked Moscow the third most attractive investment destination in Europe for retailers.

“More than 90 per cent of the most popular European brands operate in the Russian market already, with the rest considering entry,” says James Brown, head of EMEA retail research and consulting at Jones Lang LaSalle.

“Within the coming years, the high level of disposable income and the rapidlygrowing middle class will make the Russian retail market one of the European leaders in terms of turnover.”

And because Russian consumers are buying increasing amounts of big-ticket items, the more traditional financial

services have also started to take off. The potential of Russia’s mortgage market is unparalleled in eastern Europe, say analysts at UralSib. The housing stock is among the lowest in the region, but so are the ratios of mortgage debt to GDP at only 3 per cent. This compares with 9 per cent in Ukraine, 12 per cent in Poland, 34 per cent in Latvia and 36 per cent in Estonia, UralSib points out.

Express loans made at the point of sale introduced most Russians to buying on credit. These loans account for about a third of domestic appliances and furniture purchases.

The use of credit cards has taken off during the past year. The Russian credit-card market increased 60.3 per cent during the first nine months of 2012, to 590 billion rubles (HK$148 billion), with no sign of slowing down.

Spending is also driving investment into real estate, where Moscow is ranked the third most attractive city in Europe.

Tuesday, December 18, 2012 9

RUSSIA AND GREATER CHINA

Government needs to find solutions to get out of ‘trap’ Dmitry Butrin It’s unlikely that the “middle-income trap” – a problem revealed by Renaissance Capital – surprised anybody in the Russian government.

Economists have issued warnings about potential stumbling blocks to economic growth. The middle-income-trap theory has been developed by Barry Eichengreen, professor of economics and political science at the University of California, Berkeley. The trap can be seen in emerging economies when gross domestic product (GDP) per capita tops US$16,000, measured on purchasing power parity.

Renaissance Capital’s chief economist Ivan Tchakarov warned in February that Russia would hit a middle-income trap in 2014, and other BRICS (Brazil, Russia, India, China and South Africa) nations will flow suit.

“Fast-growing economies eventually slow down,” Tchakarov said. “Fast-growing economies appear to start facing the middle-income trap when their GDP per capita levels reach around US$16,000, which Russia will reach in 2014. China will hit the middle-income trap only in 2020, Brazil in 2024 and India in 2038.”

Eichengreen says economic development slows or stops at that level because of various factors. The key is demographics. The economically active population in a “trapped” economy shrinks substantially or, at least, stops growing. At the same time, the share of consumption as a percentage of GDP and inflation stabilises or rises, and the economy’s share of global trade becomes limited.

The way out of this trap, Eichengreen says, is through considerable – even mandatory – increases in imports and exports. At the same time, economies need to abandon export stimulus through currency manipulation while limiting regulation.

With these factors in place, the middle-income trap can be overcome quite fast. However, a failure to act could cost the affected economy at least seven years of stagnation.

The Kremlin meeds to look closely at the middle-income trap because of the high-profile nature of the problems it poses. Eichengreen’s proposed remedy for the middle-income trap includes the liberalisation of migration, lifting currency controls and joining free-trade

zones. The Russian government can claim it has been working on avoiding the trap long before Renaissance Capital’s analysts issued their warning.

A significant portion of the measures recommended by the American economist have been incorporated in the Ministry of Economy’s “Main Directions for the Government’s Activity through 2020”.

There are several other considerations that are universally applicable, not only to the middle-income trap or to Russia, but to most “paradoxes” of mainstream economics.

As a rule, traps are described by specialists who use far finer and more sophisticated tools than are available to national governments, and who base their research on substantially more accurately gathered and processed data than is possible on a national scale.

This creates a risk that governments will set out to avoid the traps with disproportionately powerful tools – shooting birds with artillery can be fascinating, but the consequences can be

The Kremlin needs to look closely at the middle-income trap because of the problems it poses deplorable. The fascination with avoiding traps can also have its benefits. The Russian government, traditionally more conservative and left-leaning than macroeconomists, almost always works with liberal politicians to score points.

It’s not important whether the middle-income trap even exists, just as it is not important how conceptually correct the description of the “institutional trap” or of the “resource curse” might be.

What is important is that even these concepts encourage the Russian government to be more cautious and to follow a moderate course of reform.

To paraphrase the late Chinese paramount leader Deng Xiaoping, it doesn’t matter whether a “trap” exists, as long as it makes the government more disciplined. This is largely why governments need macroeconomic experts who are not understood by all governments the way they would like to be understood.

FOTOIMEDIA

10 Tuesday, December 18, 2012

RUSSIA AND GREATER CHINA

Students start to shine Boris Mezhuyev

DMITRY DIVIN

D

ecember 5 marked the anniversary of the start of the “City Protests”. A year earlier, after a rally at Chistiye Prudy, a popular blogger and the future leader of the opposition Co-ordinating Council, Alexei Navalny, led a march of his supporters to Lubyanka Square to protest against violations during the Duma elections.

Navalny’s following was much larger than expected. After he was among a group of opposition members to be arrested, a spurt of political ferment ended in a 30,000-strong rally on Bolotnaya Square.

The “Bolotny movement” was supported and nurtured by the Moscow media, primarily the online media. Overnight, the opposition became fashionable and Navalny something of an icon. The authorities faced a “political awakening” among the capital’s middle class that drew on disenchantment with bleak economic conditions in the Russian hinterland.

But it is the pro-establishment journalists who are powering the opposition. Opposition members are keeping a low profile after a year that has brought nothing but disappointment.

It is common for pro-establishment commentators to accuse the opposition of being inward-looking and too focused on internal ideological differences. It is just as common for opposition commentators to suggest those in power have lost touch with traditional voters. So who are the winners and losers in this awaken-

OPINION ing? It is impossible to clearly answer that because the crisis has neither generated any new political actors nor reanimated old ones.

It is interesting, though, to consider which social classes have benefited the most.

The so-called creative classes, the pro-capitalist and pro-European stratum of well-paid intellectuals, IT, internet media and public relations professionals, publishers, writers and readers of glossy magazines, have definitely lost out. Before the political crisis, the creative classes were confident and secure with their tastes and preferences considered to be the latest intellectual fashion.

What do we see now? The authorities have made it clear that they are ideologically different, more traditional and less arrogant. But those demonstrating in the streets are also different. The creative classes have neither shrunk

nor lost their purchasing power, but they have seen their influence diminish, particularly among young people.

Who, then, has won? It appears the underdog has come out on top: The young intellectual class made up of students.

The biggest and most organised group of activists during the September protests was a pressure group made up of Moscow State University students.

Academic life in Moscow’s leading universities is enjoying a renaissance at a time when our economy is stagnating and politics generally matches the state of the economy.

The focus of intellectual life is gradually shifting to the institutions of higher education. It is symptomatic that some members of the opposition have been questioning the validity of the advanced degrees held by its leaders.

The degrees themselves, which only three years ago were but an extra line in the résumé, are becoming an important credential.

More and more people who have, in the past

two decades, tried their hand at various occupations are now returning to academia, realising that the move guarantees intellectual status.

One could conclude that students will soon become the main driving force in the country, a class capable of providing cultural leadership in a society afflicted by cultural and economic stagnation.

Students and those who will represent their interests must come to think of themselves as the stratum that naturally attracts the best human capital in Moscow and the regional centres. A new “young Russia” is being born in university corridors, a young Russia that is preparing a new “political awakening” with a more progressive ideology that combines demands for economic change, political liberty and academic freedom. I hope the present-day political class will be able to find common ground with the movement.

Boris Mezhuyev is a philosopher and political observer. The article appeared in Izvestia.

Moscow in major push for innovative ideas Oleg Fomichev At this month’s Open Innovations Forum in Moscow, some of the world’s leaders in innovation and business – such as Sir Richard Branson – gathered to discuss what is necessary for a knowledge-based economy to thrive. This is something Russia’s leadership has invested considerable time and resources in creating.

While our country is at a formative stage in this sector, we can already see positive dynamics and competitive products coming out of the organisations tasked with its development, such as Skolkovo and Rosnano.

Russia’s economy is not yet at a stage where private enterprise has much demand for innovation. One reason is that our companies haven’t yet exhausted the potential of “sluggish innovation”, whereby they simply import

foreign technologies and rapidly improve their productivity.

Another factor is that our business environment still leaves much to be desired. Until we optimise the basics such as customs legislation, taxes and social transfers, businesses will not have enough incentive to invest in innovation.

Innovation won’t happen in Russia without state involvement. Even in the United States, with its liberal economic policy, the government supports innovative development via various incentives and tax breaks. Our idea is to emulate these best practices while gradually handing over the initiative to private businesses.

The obvious question is over the role Russia’s energy sector, the major source of revenue for the federal budget, will play. At the energy cluster in Skolkovo, one of our home-grown companies is negotiating with global oil com-

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panies to develop its own method of refining oil into gasoline much more efficiently and cheaply than practices allow. I’m convinced there’s a great potential coming out of a synergy between our new economy, innovation and our traditional sectors in energy.

Moreover, in this field, the demand actually exists as Gazprom and other energy companies adjust to new realities in the global market. New technologies allow them to tap into previously inaccessible oil fields, while shale gas has brought about a revolution. A smaller challenge comes from renewable energies, such as solar and biofuels, which have developed into drivers of economic growth elsewhere.

Russia’s leadership is taking every measure to guarantee our companies do not lose market share to more innovative players via state support for research and development. This

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will allow energy to remain a major driver of Russia’s economic modernisation as it provides upstream and downstream demand for other sectors.

It’s important to remember that the energy sector is not going anywhere; its role in Russia’s economy will simply shrink as consumer demand-driven production and services are localised here and businesses begin to invest in innovation.

Next year’s forum will focus on more global problems – namely, how a lack of investment into fundamental research in traditional “innovation” hotbeds such as South Korea and Singapore will affect the global knowledge economy in the future. Russia has a lot to offer in this sphere.

Oleg Fomichev is Russia’s Deputy Minister of economic development.

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Tuesday, December 18, 2012 11

RUSSIA AND GREATER CHINA

Spotlight on joint venture Scientists from Irkutsk and Hong Kong work on new technology, writes Andrei Kislyakov

R

RESEARCH a centre for scientific research, education and innovation.”

LED display manufacturing is concentrated in China, where around 200 companies manufacture them, and the HKUST is a leader in the field.

NRISTU has carried out research in laser technology and optics, and the university is developing a therapeutic medical laser, while a laser for photodynamic cancer treatment is ready for production.

“We are talking about using new types

GETTY IMAGES/FOTOBANK

esearchers from Irkutsk in Siberia and Hong Kong are working on the next generation of environmentally friendly display technology.

Working as the Center for Green Display Technology, their goal is to drastically reduce power consumption in the display data.

The National Research Irkutsk State Technical University (NRISTU) and Hong Kong University of Science and Technology (HKUST) have joined forces in a competition to establish a research centre in Irkutsk that, among other things, will develop new and improved light-emitting diode (LED) displays with low power consumption and greater resolution.

“We have been collaborating with Hong Kong University for two years,” says Nikolai Ivanov, director of Irkutsk State Technical University’s Physics and Technology Institute.

“In November, we jointly applied for a competition organised by the Skolkovo Institute of Science and Technology (Skoltech) for the right to establish

A project is under way to develop new and improved light-emitting diodes.

of liquid crystals and new methods of positioning them in order to display video signals using liquid crystal display [LCD] sensors and LCD photon elements for fibre-optic lines: switchers, attenuators, filters, dispersion compensators, rotators and polarisation controllers,” Ivanov says.

The new display technology will reduce power consumption, while improving display resolution and contrast, and help create flexible displays and electronic paper.

NRISTU is one of 320 universities applying for a grant to create a research centre, each in their particular field.

Selected applications will be presented to the Skolkovo Foundation in the third round of the competition next March before final decisions are made.

Skoltech is being established as Russia’s first university to combine engineering and business education. It will have 15 research centres in five science and technology areas.

The centres will combine education, research and practical applications based on this research.

Workle creates employment opportunities Until recently, the issue of flexible working hours was clear: either give up the prospect of a pension and a decent salary and go freelance, or put on a suit and toil in the office from dawn until dusk.

A group of young Russian entrepreneurs decided to tackle this issue. Welcome to Workle, the world’s first online employment and workforce planning company. The portal makes freelance work official, and provides opportunities to people who may not have the necessary experience to get on the employment ladder.

According to its creators, the pioneering start-up is implementing a new ework format that offers online jobs.

“E-work is a very large sector, and freelance is just a part of it,” says Workle’s mastermind Vladimir Gorbunov. “We are creating jobs in finance, insurance and tourism, as well as jobs in sales. We are doing this because we want to give people without relevant experience a chance to work.

“We want to equip them with the same tools that employees of, say, insurance companies have when they work in an office. The only difference is it’s now online.”

Getting started with Workle is easy.

It takes 10 minutes to register, after which you can try your hand as a sales manager of insurance or banking prod-

ucts, or even a travel agent for one of 40 Workle clients. I chose to be a travel agent.

Every user has to sign an employment contract with the company, which essentially acts as lawyer and tax agent, taking on the task of drawing employment records, calculating and paying taxes and issuing employee earnings certificates.

Workle applies individual commission fees, which average 15 to 20 per cent of the total sales of each agent deducted from the amount due to the employer, a Workle client. Working conditions are so good that the number of Workle’s virtual consultants is increasing every day, with more than 77,500 users registered on its website.

Workle even offers free training, with a Workle certificate confirming the person’s competencies issued on completion. The training period depends on the employee’s abilities. A beginner’s course for travel agents may be completed in 10 days.

Each travel agent has his own online office linked up to various online tools, including those for travel package searches, booking and maintaining a client database. So how do you go about looking for clients? Workle provides the necessary tools and it also answers such questions. New sales managers usually offer their services to their friends and family first. I sold my first travel package to Turkey to my parents and received my first commission of 5,000 roubles

(HK$1,250) within three days. Encouraged, I tapped my contact list from the Vkontakte social network and sent my friends a notice that I was now employed as a travel agent.

Quite soon, a client from Penza contacted me in the social network, asking to find a trip to Spain. I got them a good deal. Off they went on a lovely holiday.

And I got my well-earned fee.

Filling an important gap in the market Workle.ru fills the gap between companies looking for offline staff and people seeking online work.

Employers list vacancies and outsource their services. Workle earns a commission from the earnings of each employee.

Vladimir Gorbunov, a financial investor, set up Workle in 2009 with 100 million roubles (HK$25 million).

Workle now employs 65 people.

“Workle now has to move quickly into India and possibly China,” says Gorbunov.

“We will certainly expand into the US as well, but it’s not the primary strategic market for us since we are creating jobs for people who are eager to work. Americans are not necessarily fond of working, unlike Indians or Chinese.”

PHOTOXPRESS

Tatyana Shchenkova

Flexible work can help younger people get experience.

Freelance in Russia

12 Tuesday, December 18, 2012

RUSSIA AND GREATER CHINA

Time for Father Frost AFP/EASTNEWS

I

n early December, Moscow’s streets are lavishly decorated with Christmas trees and lights. The season lasts until early January, as most Russians celebrate Christmas Day on January 7.

Celebrations begin on December 24, when the official Ded Moroz (Father Frost), a legendary Father Christmastype character, arrives with his granddaughter Snegurochka (the Snow Maiden), from their residence in the old city of Veliky Ustyug, 152km north of Moscow. Their arrival is celebrated at Gorky Park.

The event was introduced when former Moscow mayor Yury Luzhkov was in power. Accompanying this new tradition, special postboxes are placed in Moscow parks so children can send a letter to Ded Moroz. If they provide an address, they will get an answer.

Ded Moroz has long been part of the holiday tradition, bringing gifts to children on New Year’s Eve. About 300 years ago, Peter the Great returned from a trip to Europe and brought a Christmas tree with him.

Other holiday traditions – such as giving presents – were also adopted.

For two centuries, Christmas and new year were celebrated as in the rest of

Russians look forward to a visit by the legendary Father Frost and his granddaughter, the Snow Maiden, during the festive season.

FESTIVE JOY Europe, but the October Revolution changed things. The Bolsheviks, who came to power in 1917, banned open celebrations of the birth of Jesus Christ and the decoration of fir trees.

Believers had to celebrate secretly.

Members of the Communist Party could be expelled for attending Christmas services.

A few years later, party officials realised the country would not do without its main winter holiday. They decided to allow celebrations again, but on New Year’s Day – a day that had no association with Christianity. They allowed some of the traditions associated with Christmas, such as decorating the tree

Happy new year

REUTERS/VOSTOCK-PHOTO

The celebrations at Moscow’s Red Square will be the centre of attention during new year festivities. The Kremlin bells will ring out 12 times,

© ALEXANDR KRYAZHEV_RIA NOVOSTI

Once banned, Christmas is celebrated on January 7, after the bigger new year celebration, writes Inna Leonova

meaning the new year has started. About 150,000 Muscovites and guests gathered at Red Square last year to ring in the new year.

and giving presents, to take place on New Year’s Day. Ded Moroz, a pagan character from Russian folk tales, was introduced.

The first official Soviet New Year celebration was held in 1937. Ded Moroz appeared as the hero of the celebrations, putting presents under New Year trees.

In the 1940s, New Year’s Day became a public holiday.

When the Soviet regime collapsed, five decades later, the New Year’s Day celebrations were well-established.

On this day each year, families gather round a festive table and, after the clock strikes midnight, drink Champagne and exchange gifts. The renewed popularity of Christmas has not seriously affected the tradition.

In 1918, the Council of People’s Commissars decreed that the Gregorian calendar, in use throughout Europe, would replace the Julian calendar, which led to a 13-day shift in dates.

However, the Russian Orthodox Church remained true to the Julian calendar, which meant that it celebrated Christmas Eve on January 6 and Christmas Day on January 7. January 7 was declared a public holiday in 1991. Since 2005, Russians have enjoyed a lengthy Christmas holiday – from New Year’s Day through to January 10.

Orthodox churches hold Christmas services on Christmas Eve, the most impressive of which is at the Cathedral of Christ the Saviour in Moscow. Conducted by Kirill, the Patriarch of Moscow and All Russia, and head of the Russian Orthodox Church, it is attended by the country’s leading officials and the broadcast live on television. The Christian and the secular holidays complement each other. The only problem with having Christmas Day after New Year’s Day is that a growing number of Orthodox believers maintain a 40-day nativity fast before Christmas, when dairy and meat products are prohibited and fish is allowed only on specific dates.

Snow ploughs are busy clearing roads in Moscow.

Road warriors ignore weather warnings Vladimir Rebrov An unusually heavy snowstorm trapped thousands of motorists in a 200km-long traffic jam on the Moscow to St Petersburg highway for three days at the start of this month.

In Moscow, drivers ignored snow warnings, and went out into a storm that paralysed the capital’s streets for hours. A snowstorm at this time of the year is not unusual in Russia.

The city’s inhabitants also had to endure 30cm of snow and freezing rain in this period.

Hundreds of thousands of drivers set off for work in the morning as if they were in Miami, despite forecasts of heavy snow.

The right to drive is the most cherished civil liberty for many Muscovites.

The city maintains 30,000 employees and 15,000 snow ploughs in its arsenal and dedicates a US$25 million annual budget to the battle against snow.

Yet, every year when it snows, the city is brought to a standstill in great, serpentine traffic jams.

Thousands of snow ploughs removed 1.1 million cubic metres of snow. A single machine is capable of cleaning 12km of road surfaces per hour.

The specialist vehicle pushes snow to the side of the road, where the piles are loaded into dump trucks and taken to one of 200 snow-melting units.

Car owners brace themselves for the cold season.

All winter tyres are equipped with spikes, and up to five litres of windscreen-washing fluid a day is used by each motorist to enable smooth driving in the city.

Tuesday, December 18, 2012 13

RUSSIA AND GREATER CHINA

How to keep warm and fashionable in winter Phoebe Taplin Russians and expatriates suggest some of the things you will need in the cold of Moscow

Clothes

When the ‘walrus’ comes out to play

Equipment Useful items such as a fully-charged mobile phone can be doubly important.

Student Seva Ardov remembers a visiting friend from Spain: “His eyelashes were completely covered in frost after a short walk in minus 30 degrees Celsius and he forgot to recharge his phone, so at 7 o’clock he couldn’t call me to ask for directions.”

You can buy or rent ice skates and

Food, drink and mental attitude

Layers of clothes are vital as it is as hot inside as it is cold outside.

Nearly all culinary delights are available in the upmarket grocery shops of Moscow. Former Muscovite, Sara Morris-Jordan recalls “horseradish vodka – it keeps you warm, from the inside out”, and recommends following it with dark chocolate to take away the taste.

A sense of fun and adventure are your biggest assets on a trip to Moscow. Be prepared to explore, keep an open mind and have a sense of humour.

Degrees of coldness grip nation

Annual average temperature map

Sochi is one of Russia’s southernmost cities. It has a humid subtropical climate with mild winters (average 11 °C (52 °F) and warm summers (average 24 °C (75 °F).

skis all over the city, but for those who want to explore on foot, icy surfaces can be a problem. Two pieces of kit that help walkers are Yaktrax spiked attachments for boots or shoes, and Nordic walking poles, neither of which are readily available in Moscow. If you’re planning to go into the forest, a hypersonic dog whistle can help ward off stray canines.

British photographer and long-term Moscow resident Henrietta Challinor wryly observes: “A reliable watch is important, so you can be sure you have the right time when it’s still dark at 10am ... and a camera that is wellsealed to cope with temperatures below minus 25 degrees Celsius.”

GETTY IMAGES/FOTOBANK

PHOTOXPRESS

To avoid being cooped up inside all winter, many Russians take up winter sports – some of them extreme.

January 19 is an important day for those who are often called “polar bears” in the West, but known as morzh – walrus – in Russia.

On this day, which Russian Orthodox believers celebrate as the day of Jesus’ baptism, thousands plunge into the water, sometimes through a cross-shaped hole cut through thick ice.

Winter sports that qualify as more fun and less extreme are sledging and skating.

Many Russians also love to cross-country ski in the forests.

Skiing is the great leveller in some ways.

Removable layers are essential, since it is often as hot inside as it is cold outside. Barbara Valfre Corrias, a veteran of six Moscow winters, suggests: “No heavy sweaters and a change of shoes for indoors.” Russians are elegant, making choices more complicated. Danielle Eversdijk from the Netherlands notes: “Definitely heels, [with winter profile, of course] or you’ll be snubbed at bars and clubs.”

Winter gear includes hats, gloves, long coats and boots.

Shaun Walker, Moscow correspondent for The Independent newspaper in London, includes cold weather wear in his report on a trip to Yakutsk, Siberia’s coldest city. He writes: “I’m wearing: a pair of cotton socks, with a pair of thermal socks over them; a pair of anklehigh Gore-Tex boots.” The list goes on up through thermal underwear, a padded coat and hat and a thin pair of woollen gloves, “so that when I take the outer pair off ... I won’t expose naked flesh”.

And he lasted just 13 minutes outdoors.

In Moscow, “a good, solid winter coat” is usually fine.

A sense of fun and adventure are your biggest assets on a trip to Moscow.

Be prepared to explore

Oymyakon is a rural locality of the Sakha Republic (Yakutia, Eastern Siberia) located along the Indigirka River. It is the coldest permanently inhabited area on earth. The lowest temperature registered at Oymyakon’s weather station is −71.2 °C (−96.2 °F).

Say “Russia” and it triggers images of thick Siberian frosts. Indeed, it sometimes gets extremely cold in Russia, even though the climate ranges from polar to subtropical on the Black Sea shore, in Sochi, which is located on the same latitude as the French city of Nice.

Russians from other regions envy Sochi residents. The 470 residents of Oymyakon, a town in Yakutia, where the mercury dropped to minus 62 degrees Celsius last year, must be especially envious.

In European Russia (west of the Ural Mountains), the average winter temperature is rarely below minus 20 degrees Celsius, but sometimes falls to minus 30 to minus 35 degrees Celsius.

The “Epiphany frosts”, known for centuries for their low temperatures,

are usually in mid January. It is customary for the first snow in Moscow and St Petersburg to fall in late November and to stay until early April.

Winter colours all aspects of lives, but the locals have grown accustomed to frost and snow.

There’s no such thing as bad weather, there’s only bad clothes, they say.

Apart from freezing temperatures, the other winter phenomena to reckon with are icy roads and pavements, forcing drivers and pedestrians to take extra care while making their way.

Another hallmark of winter is icy rain – ice pellets formed when it rains at temperatures below freezing. Winter yields little sunlight in much of Russia, and this often makes people depressed.

14 Tuesday, December 18, 2012

RUSSIA AND GREATER CHINA

Artistic investment Paintings have gained considerable value over the years, writes Anastasia Rafal

“Russian Peasant with vodka bottle” by Natalya Goncharova (1881-1962)

Worthy works “Natalia Goncharova is the most expensive female painter in the world.

Her paintings are worth millions, but her graphic works are available for US$5,000 to US$7,000. However, investments in modern art are risky.

If you take Sotheby’s and Christie’s catalogues of the late 1980s ... only 15 to 20 per cent of the artists, then considered modern, are known and valued now.”

EGOR MOLCHANOV INVESTMENT EXPERT AT ELYSIUM GALLERY

“Russian art of the 1930s and 1940s will become more valuable, including works by Alexander Labas, Yuri Pimenov, Alexander Deineka, the artists of the 1960s. Some Russian artists lived abroad – Sergei Polyakov, André Lanskoy - and their paintings are actively traded, many of their works are available.”

REX/FOTODOM

Irina Kolosova, director of the Institute of Art Business and Antiques, also recommends investing in the “good, valuable and eternal”. She says: “Serious antique dealers have a rule – you can return anything you buy from them at any time, and they will give you a refund. Why? Because antiques will never lose their value.”

But Podstanitsky warns that it is all more difficult than it seems at first glance. He often consults collectors on whether they should buy a piece and whether it is authentic.

“But I don’t work with the ‘buy us something worth a million and sell it in a few years at 10 million’ sort of orders,” he says. “Take [Andy] Warhol. You can be sure that his works will increase in value. First, he was doing his best to make his works sell during his lifetime, and second, more than 50 years have passed. Yet, it was impossible to foresee that sort of price increase. We can be pretty sure that paintings by all of the old, top-quality artists will see their prices grow, but we can’t be sure by how much exactly they will grow.”

Potential art dealers should be aware of other specifics. A collection is always more precious than a set of odd items, but it is important to have expert verification of the provenance of each piece before selling it and such verification can cost at least US$1,000.

In many locations, art prices are often inflated. To make money on art, you must become an expert and constantly mingle in the art market. You don’t have to have millions, but you must have patience because you may have to wait a decade to make a decent return on an investment. “The price is based on auction statistics. If works by an artist do not come up at auction, we need to consider the significance of the artist and his contribution to the history of art. We need to analyse the prices,” Molchanov says. Valuers also take into account the integrity of the canvas, the origin of the painting and the period when it was created.

Kustodiev’s “The Coachman” (1923) sold for US$7 million in November.

IRINA KOLOSOVA DIRECTOR OF THE INSTITUTE OF ART BUSINESS AND ANTIQUES

“We should be looking for unappreciated artists. For instance, Georgy Savitsky, an interesting Soviet painter. His paintings are quite cheap, priced between US$2,000 and US$20,000. But in about five years ... prices will go up. However, if we consider art a financial asset, we should be looking at the Western art market, which ... shows consistent growth.”

SERGEY PODSTANITSKY ART CRITIC AND COLLECTOR

© RIA NOVOSTI

ART

BRIDG EMAN ART/F OTOD OM

A

rt critic and collector Sergey Podstanitsky is known in the Russian art market for being able to discover a masterpiece at a garage sale. Pieces from Podstanitsky’s gallery are displayed in the State Pushkin Museum of Fine Arts and the Tretyakov Gallery.

It all started in 1998, when the new college graduate, who was just finishing an internship in the evaluation division of the State Research Institute of Restoration, bought a picture in Arbat Street.

“I saw an interesting watercolour painting signed ‘Polivanov’ – he was an amateur artist, friend and colleague of the poet Mikhail Lermontov,” Podstanitsky says. “There was another signature on the back of the painting – the piece was dedicated to one of the battles of the Crimean War of 1853. That was a very interesting piece, more so because Polivanov’s works are well-known. Many of them are in museums, but there are almost none in private collections. It cost me virtually nothing. That was my first discovery and it encouraged me. I understood there were interesting things that could be acquired easily.”

His searches often produce valuable and unexpected finds. In the early 2000s, he bought 15 pieces by Roerich at a small Finnish auction for just €1,500 (HK$15,000). Judging by the description of the lots, the auctioneers thought they were peculiar caricatures.

“They were perfectly recognisable as [Nicholas] Roerich’s theatrical sketches and had his personal signatures on the obverse side,” Podstanitsky says.

Art is increasingly regarded as an investment opportunity.

“Art has ceased to be an object of adoration,” says Egor Molchanov, an investment expert at Elysium Gallery. “Before the 2000s, a painting bought at auction would be put up for a new auction in about three years, but this time frame has been cut to six months and often to 30 to 60 days. What we’re seeing now is a speculative market. Up to 30 per cent of market players acquire paintings to sell them at a premium.”

Molchanov deals in antiques and offers advice to others. “Antiques will never get cheaper. Their place in history is already defined. The number of works cannot grow [because their creators are long dead]. We have calculated that Russian art has gained in value 20 to 30 times since the 1990s.”

Some works have soared in value. In the early 1990s, pieces by Boris Kustodiev (1878-1927) were available at US$700 to US$800. Some are now selling for US$100,000.

“On a day off” (1949) by Aleksander Deineka (1899-1969)

Tuesday, December 18, 2012 15

RUSSIA AND GREATER CHINA

Republic’s new golden era Visitors to Altai region can travel through spectacular terrain, writes James Brooke

The isolated Altai Republic is becoming an upmarket ecotourist spot.

LORI/LEGION MEDIA

James Brooke is the Moscow bureau chief for Voice of America

TOURISM

VERA UNDRUTZ

also a demographic change under way.

As in many areas on the fringe of Russia’s Slavic heartland, the Altai’s native peoples are on the path to regaining majority status in their ancestral homeland.

Under Stalin, the Altai, like many distant points of the Soviet empire, was a dumping ground for internal exiles. Ethnic Russians took on the role of colonists and, by 1939, Altai and other native people comprised only 29 per cent of the population.

The 2010 census suggests the ethnic Russian population has remained constant in the intervening six decades at 115,000, while the Altai and other Turkic-speaking native groups now make up 44 per cent of the population. They are projected to become the majority during the next decade.

An Altai cultural renaissance can be seen in mountain villages. My travelling party was entertained twice by throat singers, traditional bards of epic poetry. As in Mongolia, throat singers have regained popularity and social status in the post-Soviet era.

In programmes supported by the World Wildlife Fund for Nature and the Citi Foundation, villagers are opening their houses to tourists, greeting them with bowls of mare’s milk, offering horseback tours and selling souvenirs crafted from felt matted from the wool of local sheep. Toy felt snow leopards were a big hit with our group.

On mountain roads, a resurgence can be seen in Ak Jang, the White Faith. Repressed first by the tsars, then by the Soviets, this shamanistic belief system was intertwined in the 20th century with Altai ethnic identity. Revolving around nature, mountains, water springs, the sky, fire and ancestors, White Faith has grown in popularity in the 20 years since the collapse of the Soviet system.

ALAMY/LEGION MEDIA

L

ost for centuries in a mountainous cleft between Kazakhstan, China and Mongolia, the Altai features Siberia’s tallest mountain, Mount Belukha.

To Buddhist visitors, Belukha’s twin, snow-capped peaks form the gateway to Shambhala, a mythical “Pure Land” of peace, tranquillity and happiness.

With its 4,500-metre high peaks and steep valleys, the Altai has always been the end of the road. Absorbed by tsarist Russia 250 years ago to define an imperial border with China, Altai’s mountain people were largely left alone.

The Altai Republic is one of a handful of Russia’s 83 regions that have never been penetrated by a railway.

The isolation of “Russia’s Tibet” ended this year when engineers doubled the runway at the airport of Gorno-Altaysk, the capital of 60,000 people, and S7 Airlines started direct flights from Moscow.

Workers also finished paving the 600km “Chuisky Track”. A smooth ribbon of asphalt now links the capital to the Mongolian border. The road threads its way through the rugged Altai-Sayan Mountains. In Turkic and Mongolian languages, Altai means Golden Mountains. In mid-September, larch trees explode like yellow flares against a dark green backdrop of cedar trees. The Golden Mountains are one of Russia’s nine natural Unesco World Heritage Sites.

The higher elevations are home to the Argali sheep, the world’s largest mountain sheep that weigh as much as 182kg. At the top of the food chain are snow leopards. Both of these large mammals are endangered, but in the Altai, they stand a chance of survival.

Parks protect about a quarter of the republic, largely the mountainous forested parts. The Altai Republic is the size of Hungary, but has only 206,000 inhabitants, 2 per cent of Hungary’s population.

In January 2009, a group of Moscow and local politicians rented a helicopter and flew over the mountains to hunt Argali sheep from the air. One of them, possibly intoxicated, fired a stray shot that hit the rotor of the helicopter, which crashed, deep inside a wildlife reserve.

Rescuers found the carcasses of two Argali sheep and the bodies of seven hunters, including the Altai chairman of the committee for the Protection of Fauna, the Kremlin’s envoy to the State Duma and a senior member of Russia’s Presidential Administration.

The three surviving passengers escaped prosecution for poaching by blaming all illegal activities on the dead men.

There was such a huge local, national and international furore that poaching parties now find it difficult to rent helicopters in the Altai. Local outrage heralded a sea change in the republic.

Ethnic Russians and ethnic Altai increasingly see their economic future tied to upmarket eco-tourism. There is

16 Tuesday, December 18, 2012

RUSSIA AND GREATER CHINA Grassroots group helps children

All hands on deck

Olga Kozlova

H

ongkongers are in for a special treat next February when the Sedov, the world’s biggest sailing vessel, is berthed here during its 14month world voyage. Visitors will be welcomed aboard from February 21 to 25, as at all the ports on its journey.

The four-mast steel barque set out on the voyage, dedicated to the 1,150th anniversary of Russia, from St Petersburg on May 20 this year, marking the first tribal union under the Rurik dynasty, believed to have happened in AD862 in the north of Russia. The barque will cross three oceans and visit 21 countries.

“The main idea of this voyage is to show the flag,” says Russia’s Federal Agency for Fishery spokesman Alexander Savelov.

“Russia is the world’s biggest naval power and we must show the world that we are open to everyone and pursue peaceful goals.”

The agency owns the Sedov, which continues a tradition set by two other barques – the Pallada and the Kruzenshtern.

Built as a German cargo ship and formerly known as the Magdalene Vinnen II (1921-1936) and the Kommodore Johnsen (1936-1948), the Sedov is a training vessel these days for cadets from the universities of Murmansk, St Petersburg and Arkhangelsk.

“The ship is 91 years old,” says captain Nikolai Zorchenko.

ADVENTURE “[For] the first 15 years of its life, from 1921 to 1936, the ship went to Australia and back.

However, it has not made any circumnavigations since then.

“It’s my fourth circumnavigation and my longest, whereas the earlier ones were 10 to 11 months long.

“We’re going to go around South America and South Africa – that is, all those points that sailing ships passed before the days of the Panama and Suez canals. We find ourselves right back in the 18th century.”

By the end of this year, the Sedov will have sailed halfway around the world, from St Petersburg to Acapulco in Mexico.

The ship, which regularly takes part in major maritime events, is scheduled to dock in Vladivostok next month and,

Should Russia be in the BRICS club of emerging economies?

after a short stay, will start the Asian part of her voyage.

There are about 200 people on board, half of whom are cadets from the Murmansk State Technical University.

“I’ve never been abroad [on a ship before],” says 18-year-old cadet Dmitry Stolpovsky.

“This will be a huge experience for me, as well as a great opportunity to see the world.”

The desire to see the world is not Stolpovsky’s only motivation. His favourite rock band Mumiy Troll will also be on board.

“I am a big fan of the band,” he says.

“It’s great they will be with us. They are real stars and, I hope they will remain on board until the end.”

The members of the group, which formed in Vladivostok in 1983, say they will. “The idea of recording an album during a sea voyage goes back to my childhood”, says lead singer Ilya Lagutenko. “It began to take real shape more than a year ago, during our Navy Tour voyage, when we staged concerts on Russian warships.”

Lagutenko says: “The ship’s arrival in any country shows not just our flag but also our friendliness.”

Savelov adds: “Various cultural and entertainment events are staged on the ship in co-operation with Russia’s Ministry of Foreign Affairs, embassies, consulates and other representatives of Russia.”

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Ship in top shape The Sedov will be at sea for 14 months on a 45,000 nautical-mile voyage. The barque will visit 21 countries and 30 ports, including Hong Kong, Manila, Pusan, Nagasaki, Singapore and Chennai. Visit www.sts-sedov.info for more information about this historic ship’s route.

Join the crew Early next year, Russia and Greater China will hold a quiz. The main prize will be one night aboard the Sedov when it berths in Hong Kong.

More information at www.rbth.asia/sedov. Other prizes include a meal with the captain and souvenirs.

The ship is 91 years old. [For] the first 15 years of its life, until 1936, the ship went to Australia and back

© RIA NOVOSTI

City in for a treat when the Sedov pays a visit, writes Marina Darmaro

ALAMY/LEGION MEDIA

The Sedov will visit 30 ports.

It started with the story of Maxim, a oneyear-old boy who lived with his single mother in the Amur region. He was severely burned after his mother left him alone with a heater on while she went out drinking.

Both of his legs eventually had to be amputated.

Treated at a local hospital without adequate nursing or medicine, Maxim was handicapped for life. He was removed from the custody of his mother, which left nobody to care for him.

Maxim was later moved to the orphans’ department of G.A. Albrecht Scientific and Practical Centre of Medical and Social Expertise, Prosthetics and Rehabilitation in St Petersburg. Volunteers could do little for him due to a lack of funds.

Maxim’s story reached members of Hong Kong’s Ladushki, a club started by mothers who wanted their children to learn Russian. Evgeniya Menassa, one of Ladushki’s mums, helped Maxim during his first operation in Blagoveschensk.

Deeply moved by Maxim’s story, Inna Lullove joined forces with other mothers to help Maxim and the hospital.

After they visited Maxim in St Petersburg, Lullove and her family adopted him. Maxim gained a lovely family and now has the best prostheses available.

However, other children at the Albrecht centre continue to live in poor conditions. Ladushki founder Elena McCaffrey, continues to help the children.

Ladushki and the Russian Club in Hong Kong launched the Hong Kong Russian Charity Fund last year.

They staged the Russian Ball, casual cocktails and a themed children’s party with funds going to the Albrecht centre, which is in need of special medical furniture. The Russian Charity Fund will hold more events.

Please e-mail russianclubhk@gmail. com if you can help the charity.

The Russian Charity Fund welcomes donations from Hong Kong.

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