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Sunday, March 31, 2013 www.rbth.ru ALAMY/LEGION MEDIA

Technology And now a formula that squeezes more out of petrol

Armaments Companies sum up the results of IDEX 2013

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

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IN FOCUS

Diplomacy As long as world powers pass the blame, mediation efforts will stall

Who will stand up and be counted? Nikolay Surkov MIDDLE EAST AND GULF EDITOR, RBTH

This month the Syrian uprising marked its second anniversary. Unlike the other Arab revolutions, it is characterised by its deep involvement of Russian interests. OLEG FOMICHEV SPECIAL TO RBTH

Russia’s role in Syria is widely criticised.The West and the Gulf states accuse it of unconditional support of its ally, Syrian President Bashar

Al Assad. They point to weapons sales and Moscow’s reluctance to vote for any hardline resolution at the UN Security Council. Russia itself says it must prevent a new Libya and defend the principle of non-intervention. It fears regional stability may be shattered if Syria sinks into anarchy. The Russian leadership stresses that it is not protecting Assad, though hints that he is a minor evil com-

pared to rule by extremists and sectarian strife. Throughout the last months Russia has made attempts to promote a settlement based on the Geneva agreement of June 2012 through a ceasefire and negotiations. Minister of Foreign Affairs Sergei Lavrov met the representatives of the internal opposition and invited to Moscow the head of the Syrian National Coalition

At the RussianArab Cooperation Forum in Moscow, Sergei Lavrov (second left) met Adnan Mansour (left), Nabil Al Arabi (second right) and Hoshyar Zibari.

Moscow still hopes for political solution in Syria

ussia is constantly accused of having its own vested interests in Syria and of being the main obstacle to decisive international action to remove the regime of Bashar Al Assad. But in reality it is not that simple. Moscow is genuinely convinced that if it supports the West's initiatives in Syria, chaos will ensue. The Kremlin fears that in the absence of an agreement between Assad and the opposition, a UN resolution may become an excuse for a Libya-style military campaign that will cause the collapse of the existing state but will fail to create a new one. The Libyan experience showed that in such cases the West and its allies tend to wash their hands and leave the country adrift. In the case of Syria, this is likely to lead to sectarian strife far worse than that in Iraq in 2005-2007. Yet none of the international or regional players is willing to accept responsibility for the situation in Syria the way the Americans did after the fall of Saddam. The Gulf States simply lack military might. Turkey is not eager to burden itself with involvement in a crisis that is likely to take years to settle and might provoke violent new confrontation with the Kurds. The US and Europe have declared almost openly that they do not want to be dragged into another Iraq or Afghanistan. Moscow is evidently wary of the Syrian opposition. As foreign minister Sergei Lavrov puts it, “there is no negotiating team on behalf of the opposition, and this coalition includes too many different groups to be able to agree on a unified delegation.” However, Russia is not giving up hope for dialogue with Assad’s adversaries. It is trying to ascertain what they are worth and if they can keep their promises. Russian diplomats also consistently voice support for the efforts of Lakhdar Brahimi, the UN and Arab League envoy for Syria. Nonetheless, there are many voices calling for Russia to force Assad to step down. But they forget that the Syrian president is backed by a huge number of armed supporters who cannot allow him to surrender and leave them at the mercy of the winners. So even if Moscow cuts all ties with Assad, he will not resign without a clear prospect of an acceptable settlement and guarantees of security for Syria's 2.6 million Alawites.

(SNC) Moaz Al Khatib. He also held negotiations with his Syrian colleague Walid Al Muallem. In the hope of finding a solution, Russia has made attempts to reach an understanding with the US. Both countries seek an end to the bloodshed, but have different visions of the way this goal should be achieved. CONTINUED ON PAGE 6

IN THIS ISSUE Corruption Ministers come under focus amid crackdown

SPECIAL REPORT

President Vladimir Putin has submitted a bill prohibiting officials from holding foreign securities or bank accounts abroad. MUNZER HALLOUM RBTH AFP/EASTNEWS

The President’s bill comes as a result of a public and parliamentary discussion about corruption within the state apparatus. The bill would extend a ban on hold-

"Stop the bribes!" demands a protester in Moscow.

ing foreign bank accounts to all public servants, including Central Bank Board of Directors members, officials of constituent entities of the Russian Federation and functionaries of state-owned corporations. Government officials will not be able to open bank accounts abroad even to pay for education or medical expenses, yet they will be allowed to own foreign real estate – provided they report it in

Russia.Violators will be punished, potentially by being discharged from office. Experts polled by RIA-Novosti agreed that the bill would be an important milestone in the fight against corruption. They believe the document is preventive rather than prohibitive or repressive in nature. CONTINUED ON PAGE 2

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Russia’s fight against corruption enters a new phase

Global warming brings heated interest to polar resources P.04-05

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Politics&Society

GULF NEWS_SUNDAY_MARCH_31_2013

Sochi2014 Time to pick up your fan passport

Getting in line for Olympic tickets Tickets for the Sochi 2014 Winter Olympics are now on sale. But getting your hands on one is not easy, and it’ll cost you. Moreover, a ticket alone will not guarantee access to the grandstand. ELENA KOVALEVA KOMMERSANT-DENGR

“This is an important part of the anti-corruption package of President Putin’s electoral programme currently being implemented … It’s very important for our elites to become more disciplined and responsible now, to purge themselves. The passing of this bill and enactment of the law will realise this," said Associate Professor of the MGIMO Political Theory Department Jan Vaslavsky. Before that, on January 1, a law “On Control over Correspondence between Spending by Persons Employed in Civil Service Positions and Other Persons and Their Income” came into effect in Russia, making it mandatory for government officials to report their income and spending by their family members. Misrepresentation or a mismatch between income and spending will entail dismissal and investigation. Lawmakers hope these measures will reduce the scale of abuse not only by federal but also by municipal officials, as well as by employees of state-owned corporations.

Chairman of the State Duma Ethics Committee Vladimir Pekhtin was the first victim of the new bill. He had to vacate his seat voluntarily after it came to light that he had failed to declare a Miami condo worth several million dollars. At least two senators are planning to leave the Federation Council, the upper chamber of parliament, for similar reasons. Russia’s authorities have long realised that rampant corruption is the number one threat to the economy. A law “On Combatting Corruption” was passed in 2008. Putin declared the fight against corruption a priority after he returned as head of state in 2012. Russia was ranked joint 133rd in the 2012 Transparency International Corruption Index. The UAE, which also plans to introduce a new anti-corruption law, was joint 27th alongside Qatar. The fight against corruption heated up last autumn with a wave of high-profile corruption scandals implicating various government agencies and state-owned companies. The Ministry of Defence came first. As a result of an investigation, Minister Anatoly

Deputy Minister for Regional Development Roman Panov was put on trial on corruption charges.

Serdyukov lost his job and was questioned in a case involving illegal sales of military-owned real estate, resulting in 4 billion rubles (more than $130 million) in damage. Next was a case of embezzlement of funds appropriated by the Ministry for Regional Development for construction of facilities for the APEC summit in Vladivostok. Former Deputy Minister Roman Panov wound up in prison. Soon afterwards, Russian Space Systems, the firm responsible for building the GLONASS satellite positioning system, found itself at the centre of a scandal after it was discovered that 6.5 billion rubles (more than $210 million) had been transferred to flyby-night company accounts. The Russian media have been active in covering the fight against corruption. During 2012, the Ministry of Agriculture, the Ministry for Regional Development and the Ministry of Communications, as well as the federal agencies Roskosmos, Rostelecom, Roshydromet, Rosimushchestvo and Rosatom became the focus of media attention. Each case revealed names of government ministers or highranking federal officials and amounts of stolen public funds. According to the All-Russian Centre for Public Opinion Research, 45 per cent of those polled in late 2012 said they had noticed results in the fight against corruption, up from 36 per cent in 2007.

It is now mandatory for government officials to report their income and spending by their family members.

THE NUMBERS

49 Thousand cases of corruption were registered in Russia in 2012. Authorities warn that it signifies an almost 25 per cent growth in comparison with 2011.

700 Million dollars (21 billion rubles) was the damage caused by corruptionrelated crimes in 2012, according to Russian Prosecutor General Yury Chaika.

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Prices and Speciﬁcs

ALYONA REPKINA

CONTINUED FROM PAGE 1

Russia’s fight against corruption

Tickets for all events went on sale on February 7, exactly one year ahead of the opening ceremony. The maximum price of a ticket to the Sochi Olympics is 50,000 rubles ($1,700). That’s how much you’ll have to fork out if you want to attend the opening or closing ceremony and sit in the premium sector. The cheapest tickets to these ceremonies cost 4,500 rubles ($150), while tickets to some of the sporting events cost as little as 500 rubles ($17). The average ticket price in Sochi is 6,400 rubles ($213), with the most expensive being for the Russians’ favourite winter sports, ice hockey and figure skating. The prices for Sochi tickets are slightly lower than for the recent London Olympics, where prices ranged, according to official sources, from £20 to £2,012 ($31-3,167). Like the London Olympics, tickets first went on sale via the in-

ternet (www.tickets.sochi2014. com), and the only way to pay for them is by Visa card. Other cards are not accepted. This restriction will be in place at all the Olympic venues; only Visa cards will be accepted by ATMs and in shops. About 70 per cent of tickets are expected to be sold to Russians and 30 per cent to citizens of other countries. “Foreign fans who are not Russian citizens will be able to buy tickets from the national Olympic committees of their own countries, or from authorised ticket agents, a full list of which will be posted on the www. sochi2014.com site,” the Sochi 2014 Organising Committee announced. To prevent ticket touting and forgery, a fan passport will be introduced that will be obligatory to enter any Olympic sporting venue. The passport can be obtained via the internet after buying a ticket. Applicants for the Olympic passport will be vetted by the federal executive bodies responsible for security during the Games. If a fan is refused a passport, he can get a refund for their ticket.

Protests Emotions run high over utility bills

Regions see citizens take to streets

Legislation New anti-tobacco law will affect 44 million people

Nation moving towards a smoke-free society On 25 January, the State Duma adopted the “anti-tobacco” bill in its second reading. Russian smokers only have about a year left to get used to the new regulations - or kick the habit. OLGA DORONINA EXCLUSIVELY FOR RBTH

SHUTTERSTOCK/LEGION-MEDIA

The Ministry of Healthcare of the Russian Federation drafted the bill "On the Protection of Public Health from the Impact of Environmental Tobacco Smoke and the Effects of Tobacco Use" after it had calculated that about 40 per cent of the country’s adult population, or 44 million people, are smokers. Approximately 400,000 Russians die from smoking-related diseases every year. Most anti-tobacco measures will come into force on June 1, 2013. This summer, smoking will be banned in public places, includ-

Despite government efforts, smoking is a common habit in Russia.

ing hospitals, production facilities, public transport, suburban trains and government offices. A similar law has been in place in the UAE since 2009.

From June 1, 2014 smoking will also be banned in hotels, restaurants, cafes and bars, on passenger train services and long-distance sea journeys, as well as at

commuter rail platforms. Cigarettes will not be available at railway stations and airports (except in duty-free). As for public catering facilities, there is no doubt that the law will have the biggest impact on bars and music venues selling alcohol. “Restaurants, where people usually spend quite a lot of time, will hardly notice any difference,”Yelena Doguzova, director of two Moscow restaurants called Prostiye Veshchi ("Simple Things"), believes. “In contrast, those places where people go for a quick drink and smoke may lose customers.” As for long-distance trains, it is unclear what passengers should do on, say, a two-day trip from Moscow to Siberia. “Prohibiting smoking on long-distance trains is next to impossible,”says Galina Padysheva, a 55-year-old journalist and smoker for over 30 years. “I simply cannot imagine a smoker capable of surviving several days without a single cigarette. Cigarette ads will be banned, as will attempts to attract customers with discounts or special offers. New children’s films and cartoons should be free of any scenes involving smoking, but old Soviet cartoons will be spared this fate.

While Moscow's street politicians take a breather, experts have observed a rise in social activism in the regions. But in contrast to the capital, the demands there are not political, but social. OLGA DORONINA EXCLUSIVELY FOR RBTH

In its monthly analytical ranking of social and political stability in the Russian regions, the St. Petersburg Politics Foundation noted a marked revival of social activism in the provinces against a backdrop of diminished political protest in the capital. The reason is a sharp rise in utility costs in several regions. For example, St. Petersburg has seen a 40 per cent jump. But the biggest leap was observed in the Murmansk Oblast region and the Altai Republic, where some municipalities have been hit by a 225 per cent hike. Overall, housing and communal services in February 2013 were 9.8 per cent more expensive than in February 2012, according to the Federal State Statistics Service. Protests against rising utility bills have been held in Barnaul (3,500 km from Moscow; population: over 680,000), Murmansk (1,900 km; over 300,000), Novosibirsk (3,300

km; 1.5 million), and Penza (636 km; 0.5 million). Though the demonstrations were attended by just a few hundred people, the authorities were not slow to respond. President Vladimir Putin called for lower utility rates in regions where they had risen without justification. In several regions, senior officials responsible for housing and utilities have been dismissed. According to polls, most Russian citizens consider utility rates to be the key problem in the country. Experts disagree on whether current protests will morph into political demands. "It is primarily a social phenomenon for the time being. But the next step could be a protest against the authorities," surmises the head of the State Duma Committee for Housing and Utilities, Galina Khovanskaya (A Just Russia). Yevgeny Gontmakher, head of the Social Policy Center at the Russian Academy of Sciences Institute of Economics, is sure the protests will not take on a political dimension. "A political protest occurs when there is an organised political force trying to convey a civilised message. In this instance, the forces at work are more elemental," said Gontmakher.

Business&Finance

Technology Fresh thinking by young scientists promises to cut fuel production costs

NEWS IN BRIEF

New petrol formula fuels hopes for cost efficiency

Foreign banks forbidden to open branches

St. Petersburg startup Global RRT believes it can reduce the cost of petrol production. The new technology has already been bought by Indian Oil. SERGEI TITOV EXCLUSIVELY FOR RBTH

Marina Maksimova

Moscow airport tops European list Moscow's Sheremetyevo airport tops the list of Europe's best airports in terms of passenger service quality, according to Airports Council International (ACI). This independent rating is based on an ACI study of the world's major airports. ITAR-TASS and RBC Daily

Sheremetyevo remains Moscow's main hub, despite competition.

OPINION

Developing infrastructure is vital for Russia's economy Mark Rubinstein MARKET ANALYST

KOMMERSANT

"If these figures are true, that's pretty cool!" thought former vicepresident of TNK-BP and now consulting company owner Douglas Harris, having glanced at a presentation from startup Global RRT that had somehow ended up on his laptop. In the document, two young Russian scientists proposed a method of saving around $0.060.09 per litre on the production of petrol. Having read the article through, Harris turned around and flew straight to Moscow. After meeting the founders of Global RRT, Oleg Parputs (33 years old) and Oleg Giyazov (23), the top manager agreed to head their company. Both graduates of the St. Petersburg State Institute of Technology, Parputs and Giyazov met at Lenkor Engineering, a firm that designed refineries for Chinese and Korean customers. In their spare time, the young scientists developed a theory that Parputs had proposed several years previously in his PhD thesis. It postulates that the chemical processes required for isomerisation (the extraction of petroleum components of Euro4 class or above) can take place in just one column, and not six, as in the case of modern industrial refineries. In 2011, the two partners proved their theory mathematically. They took their model to the suits upstairs, but received a polite rejection, since the company was more interested in bringing existing capacities on stream than in developing new technologies. They then turned to venture capital funds, but the so-called "angels of business" were very distrustful. The only one to agree to invest was ForesightVentures, which had previously only funded IT startups. The $100,000 loan went on company registration and patents to protect the idea and develop technical documentation. Six months later, news of the technology broke. The journal Chemical Engineering and Pro-

President Vladimir Putin has signed a law prohibiting foreign banks from opening branches in Russia. The bill stipulates that foreign-based financial institutions may only operate in Russia through subsidiaries and representative offices. Russia’s regulatory authorities and government had supported the idea of clearing branches of foreign banks from the country for years. The key rationale was that such entities do not fall within Russian jurisdiction and are not subject to full-scale scrutiny.

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Oleg Giyazov (left) and Oleg Parputs (right) have turned a novel idea into a potential global game-changer.

The huge saving in energy comes from redirecting heat released during the initial chemical reactions. cessing and other scientific publications printed several articles by Western researchers confirming the viability of the idea. Giyazov and Parputs' isomerisation technology promised a new level of efficiency, reducing capital costs by a factor of 3.2 and outlays on energy resources fivefold. The huge saving in energy comes from redirecting heat released during the initial chemical reactions to other processes further down the chain. Expert confirmation opened up new horizons. First of all, in summer 2011, on the back of investments worth 40 million rubles ($1.3

million), RRT became a resident of Skolkovo. The business then received $1 million from Mikhail Abyzov, Russia's minister for open government, who runs a venture capital fund. Secondly, Global RRT was headed by Douglas Harris. With feet now planted on solid ground, the partners took their development to Gazprom to test its feasibility. In the words of Parputs and Giyazov, the Russian gas giant confirmed that Global RRT's technology would save $0.06-0.09 per litre of petrol production. However, RRT's first customers were from India. Indian Oil bought a licence to use the technology and the accompanying documentation for $6 million. RRT's technologies sparked the interest of developing countries in the Pacific region, the Middle East, and Central Asia. After signing its first contract and appearing at several trade

fairs, RRT received inquiries from Russian clients, too. In January 2013, Russia fully switched over to Euro-3 standard petrol. Last year, oil companies spent approximately $6.3 billion (190 billion rubles) on modernising refineries. The company recently signed contracts with two refineries in central Russia. It is more profitable to work with refineries, which in Russia number about 186, than with state oil companies, says Parputs. The formalities are fewer and the licence fee is the same. At present, the founders of RRT are completely immersed in their ongoing projects — contractual deadlines have been set for 2014. This spring, CEO of Global RRT Douglas Harris will summon Parputs and Giyazov to his office in the US to report on the first results and, potentially, sign a new batch of contracts.

The fastest growing sectors will be those contributing to the growth of domestic consumption and focusing on infrastructure development. The former will grow faster than normal because of extensive bank lending, higher incomes, slower inflation and a stronger ruble. The latter will be showing growth because the country needs to improve its outdated infrastructure, an obstacle to rapid economic expansion. Consumer lending in Russia went up 40 per cent year-on-year in 2012 to reach the pre-crisis record high of 2007. Yet the debt burden on Russian households remains insignificant, at about $1,800 per capita, compared to around $4,000 in Eastern Europe and more than $30,000 in developed economies. If the Russian economy manages to grow overall at a rate of 3-3.8 per cent this year, the sectors focusing on domestic consumption will gain from 10 per cent to 20 per cent. The sectors with securities having the highest potential yield in the next six to 12 months are finance, home construction, transport, automotive, media services and telecoms.

Regarding infrastructure, one should bear in mind that outdated infrastructure also prevents the country from meeting its international commitments, including hosting the 2018 FIFA World Cup. Organising the 2018 World Cup will cost Russia an estimated 1.3 trillion rubles ($42 billion).Yet not one of the 12 stadia is currently complete and road interchanges and hotels in the 11 host cities still do not meet official requirements. The federal programme for development of transport infrastructure for 2010-2015 envisages investment in railways alone at 320 billion rubles ($10.4 billion) annually. In the energy sector, probably facing the most infrastructure challenges, 62 per cent of the facilities in the generating segment alone are over 30 years old. This segment requires almost 3 trillion rubles ($97 billion) in investment during the next six years. A share of investments in this sector will go to international giants, such as General Electric, Siemens, Caterpillar, and Komatsu (though they are likely to create new jobs, hire local contractors and pay taxes) but the main part will be spent on Russian products and services. Mark Rubinstein, Director of the Analysis Department at IFC Metropol

Russia-UAE Governments take new step to boost major bilateral investments

UAE state companies to receive tax privileges A new agreement between the Russian Federation and the United Arab Emirates will make income from investments tax-free for state-owned companies and funds. VADIM VISLOGUZOV KOMMERSANT

The striking aspect of this agreement is that it has been concluded with an offshore state and will apply only to state companies of both countries. The Russian government was prompted to enter

into this nonstandard agreement by hopes of Arab investment. The agreement between Russia and the United Arab Emirates “On taxation of income from investments of the contracting parties and their financial and investment institutions” was signed in Abu Dhabi in December 2011. This document differs noticeably from similar agreements between Russia and other countries: tax privileges will apply only to state structures of the two countries. These include their central banks

Income from portfolio investments by UAE state funds will be taxexempt in Russia and this may lead to billions of dollars of investment in the Russian economy.

and state pension funds, central and regional governments, as well as financial or investment organisations wholly owned by their respective governments. In the Russian Federation this agreement provides tax breaks on profit; in the United Arab Emirates — on its nominally existing tax on corporations and on income tax. In Russia, dividends, percentages and income from the sale of property (except real estate) and derivative instruments will be taxexempt. It is of note that percent-

ages to state structures and their subsidiaries are often exempted from taxation in other Russian tax agreements as well. The truly unusual element here is the zero per cent interest rate on dividends (in agreements of this sort the rate is usually 5–10 per cent, while the internal Russian rate is 15 per cent). The assumption is that the chance to save on this tax will create a strong incentive for UAE state companies to invest in Russia. This is the intent of the agreement’s general logic: to make in-

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come from portfolio investments by UAE state funds and their subsidiaries tax-exempt in Russia.The Russian government makes no secret of the fact that this agreement is oriented toward major investments that official parties from both sides will “monitor." As was noted earlier by Kirill Dmitriev, CEO of the Russian Direct Investment Fund, UAE investments in the Russian economy may amount to billions of dollars. Possible projects include transportation, mining, pharmaceuticals and agriculture.

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Special Report

GULF NEWS_SUNDAY_MARCH_31_2013

THE ARCTIC THE TOP OF THE WORLD IS HEATING UP — BOTH LITERALLY AND FIGURATIVELY. WHAT DOES IT MEAN FOR GEOPOLITICS?

POLAR OIL AND GAS TRIGGER COMPETITION ALEXEI DOLINSKY SPECIAL TO RBTH

The increased melting of the Arctic icecap creates an opportunity for increased economic activity in the region, and the change has not gone unnoticed by regional players. Between 2006 and 2009, the five countries that directly border the Arctic Ocean — Canada, Denmark, Norway, Russia and the United States — adopted national Arctic development strategies. The other three countries that have parts of their territories beyond the Arctic Circle — Sweden, Finland, and Iceland — soon followed suit. Today, even countries such as China and India are increasingly active in the region. In December 2012, the Russian International Affairs Council (RIAC) presented its proposals for an international roadmap of Arctic cooperation. According to Andrei Zagorsky, head of the Arctic project at RIAC, there are several main reasons for economic development of the region — energy first among them. “Vast energy resources are probably the most important reason for the Arctic economic development,” Zagorsky said.“High energy prices and technological advancement [have] made shelf oil and gas drilling there potentially profitable.” According to some estimates, 58 per cent of the hydrocarbons located under the world’s oceans are found in the Arctic. Major players in the oil and gas industry, including Shell, Statoil, Total, Gazprom, Rosneft and BP, have ambitious plans for the region. The melting of the Arctic ice has also gradually opened up cargo shipping routes across the Arctic between the Atlantic and Pacific oceans. The Northern Sea Route along Russia’s northern coast remains the shortest sea route between Asia and Europe, while the Northwest Passage is a route along the top of North America. Russia’s Gazprom has already started using the North East Passage for exporting liquefied natural gas (LNG) to Japan. PricewaterhouseCoopers reports that the route may take up to 1 per cent of the $1 trillion trade between the EU and Asia. Though these routes would be of limited interest to the Middle East´s big oil producers for geographical reasons, they would reduce the volume of shipping passing through the Suez Canal and the Gulf of Aden. The new accessibility of Arctic resources has resurrected the previously frozen issue of who owns the Arctic. The 1958 Convention on the Continental Shelf and the 1982 United Nations Convention on the Law of the Sea state that nations have the right to a territorial waters zone of 12 nautical miles and an exclusive economic zone of 200 nautical miles. In an

exclusive economic zone, a country has sovereign rights for the purpose of exploring natural resources. Nations can also claim their exclusive right for seabed resources exploration in a stretch of the seabed adjacent to their shores in a zone of up to 350 nautical miles, if they prove that it is a continuation of the continent. Russia and Norway have already claimed their extended continental shelf in the Arctic, while Canada and Denmark are preparing to do so. Although most of the Arctic's natural resources are located in undisputable exclusive economic zones and continental shelves, some may still be located in the open sea and available for exploration by other countries. Another issue that has potential for disputes is jurisdiction over shipping routes. Both Russia and Canada claim their northern sea passages are historic routes that

activities. In 2007, Russian submersibles put a national flag on the seabed beneath the North Pole; Canada, Norway and Russia have announced the modernisation of their military forces in the Arctic; and Denmark is also creating its own Arctic Command.Yet, said Zagorsky,“There is hardly any space for security competition in the region. All countries would get more from cooperation."

Arctic Resources and Maritime Boundary Lines

The new accessibility of Arctic resources has raised the previously frozen issue of who owns the Arctic. must remain under national control. National control would not prevent foreign vessels from using the passages but they would have to inform national authorities in advance to get permission. The lack of clarity over territorial and economic rights in the Arctic is part of what stimulates countries to be active in the region. In the Arctic Ocean nations, the adoption of Arctic strategies has been followed by other legal, symbolic, economic and security

NATALIA MIKHAYLENKO

Shipping New route on the top of the world

Trading pirates for icebreakers The melting of the polar ice cap could bring significant savings for international shipping firms — which might result in better prices for consumers. OLGA SENINA SPECIAL TO RBTH

A new route recently appeared on the map of international commercial shipping. Known as the Northern Sea Route (NSR), it stretches for 3,500 miles, taking ships through the Kara Strait off Russia’s northern coast to Canada’s Providence Bay. The route has been known for some time, but in the Soviet era it was closed to foreigners. And even despite climate changes, it remains ice-bound for part of the year. An ice lane for super-heavy vessels was opened only in 2010. This route is a third shorter than the traditional route from Asia to Europe via the Suez Canal. It reduces the transit time on the

GETTY IMAGES/FOTOBANK

The warming of the Arctic region has opened up a new competition for resources, particularly oil, gas and rights to lucrative shipping channels which can become an alternative to existing routes.

Ice remains a concern for shipping on the northern sea route.

benchmark Rotterdam-Yokohama route from between 35-38 days to between 20-23. Vladimir Mikhailichenko, director of the Non-Profit Partnership for Coordination of the Use of the Northern Sea Route, explained the advantages of the northern route:

“The Atlantic is full of storms, and the Gulf of Aden, pirates. If you're afraid of pirates, you face a 45day trip around Africa. The NSR saves time and money. Icebreakers are par for the course, but the cost is comparable with the Suez Canal passage, while the expensive insurance required for carriage of goods through icy waters is offset by the risks of a confrontation with pirates on the southern route,” says Mikhailichenko. Even so, for some shipping companies the problem of piracy is unavoidable. Companies based in the UAE, for example, are suffering from soaring security and insurance costs, and with pirates raiding as far as the Straits of Hormuz, the gateway for 35 per cent of the world's petroleum sea traffic, there is little alternative. Until 2010, proponents of the NSR faced an additional problem. Whereas the Suez Canal administration has kept its freight tariff

at $5 per tonne for many years, in Russia the fee averaged between $20-$30. Two years ago, however, the Russian government set a ceiling with the intention of reducing the rate for vessels under contract. As a result, the average tariff, according to market players, is now a steady $4-5 per tonne, and traffic in 2011 rose by 5.5 times, partially due to the changes. Recently Mikhailichenko’s organisation measured the speed of passage through the NSR of 15 super-heavy vessels: they took between 7-22 days, depending on the weather conditions and the exact route. Daily maintenance outlays per tanker come to between $40,000-50,000, so choosing the NSR over other options could result in significant savings. Korean fuel exporters have recently been experimenting with the route as a northern alternative to the Suez Canal. Market players say the route will save about $500,000 per oil tanker. From July-September this year, the Finnish port of Porvoo saw a total of 142,000 tonnes of South Korean jet fuel delivered from refineries in Yeosu, owned by the company GS Caltex. The fuel was

shipped via the northern route in three tankers, the Stena Poseidon, the Marika, and the Palva, all accompanied by Russian icebreakers. After unloading in Porvoo, the Palva returned to Korea with gas condensate. Similar cargo produced by Russia's Novatek company was shipped west to east by the Stena Poseidon and the Marika, but the vessels were loaded not in Finland but in Murmansk, and were chartered to China. Fuel transits now account for a large proportion of traffic along the NSR, but potential exists for the transportation of container goods, coal, and metal, according to Andrei Shenko, an analyst at Investkafe. To boost the route’s commercial appeal, a permanent fleet of icebreakers is needed to keep it open year-round. By 2020, Russia plans to build three shallow-draft diesel icebreakers at a cost of 25 billion rubles ($789 million), and a new nuclear icebreaker for 20 billion rubles ($631 million). Also, by 2015, ten rescue centres are due to be opened along the NSR at a cost of $30 million and Russia's fleet of Arctic stations will be upgraded and revised.

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Special Report

GULF NEWS_SUNDAY_MARCH_31_2013

The Russian Arktika-class nuclear-powered icebreaker “50 Years of Victory” sails through the Arctic Ocean.

PRESS PHOTO

CORBIS/FOTO SA

Despite the optimism of the major oil companies, environmentalists are concerned with potential threats to the environment of the Arctic and its inhabitants.

PHOTOSHOT/VOSTOCK-PHOTO

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2009

International commercial shipping via the NSR began only in 2009, when two vessels carrying 643,000 metric tons of cargo successfully plied the route.

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INTERVIEW IGOR CHESTIN

“Development ... could provide energy security”

“Hydrocarbon production in the Arctic is hype”

Robert Blaauw, senior adviser of Shell’s Global Arctic Theme, talked to Kommersant correspondent Alexei Ivanov about development of the Arctic and his belief that the time to start is now. Has the time really come to develop the Arctic’s resources? Can’t the global economy make do with resources available in the deposits that have already been developed? According to Shell’s forecast, global demand for energy will double between 2000 and 2050. Renewable sources of energy, even if used on a larger scale, will only meet around 30 per cent of demand, meaning that the world will still depend on the extraction of mineral energy resources. The world’s population is growing, but the availability of resources is not. The US Geological Survey announced in 2008 that the Arctic contains around 22 per cent of the world’s undiscovered oil and gas reserves. A reasonable development of those could pro-

KOMMERSANT

INTERVIEW ROBERT BLAAUW

vide energy security for the world’s growing population. Do technologies exist today that ensure safe oil production in the Arctic? Shell conducts its design and testing at the most advanced level based on forward-looking technology, including blowout preventers with dual shear rams and an emergency shutdown system. On the one hand, this is a very costintensive environment, but on the other, it has enormous potential. Drilling in the Arctic isn’t something new. It has been going on for decades. There’s a wealth of accumulated experience, and the industry is well aware of the risks involved in geological exploration. We are continuously improving technology to prevent oil spills, to reduce the environmental footprint of our facilities, and to increase work safety.We are also actively developing technology driven by the specifics of Arctic operations. We know that open-water

HIS STORY NATIONALITY: DUTCH HOMETOWN: THE HAGUE STUDIED: CIVIL ENGINEERING

Igor Chestin, director of WWF Russia, the Russian office of the World Wildlife Fund, talked to Kommersant correspondent Ilya Arzumanov about the expediency of developing offshore hydrocarbon resources in the Arctic.

Since joining Shell in 1980, Blaauw has worked in roles in commercial and general management across the globe. In 2002, he moved to Shell’s headquarters, where he now manages the operational, technical, social and environmental challenges specific to the Arctic.

Is it possible to extract natural resources safely in the Arctic? It is possible in a number of regions that are not covered with ice for at least two warm months of the year. Production has long been underway in all ice-free Arctic shelf sections, primarily in the North Sea, which is the birthplace of all offshore production technologies.

seismic work can be harmful to marine wildlife, especially commercially harvested species. That’s why we have implemented a set of measures to mitigate such risks. One such method is to conduct seismic work on ice, which allows seismic exploration to be done in wintertime rather than on open water.

How accurate are the data on the explored offshore reserves? It’s impossible to say so far if there are commercially viable hydrocarbon reserves there. Exploratory drilling is being planned all over the Arctic. A long-term offshore development programme is being developed and exploration costs calculated. In any case, fully-fled-

Trillion cubic metres of natural gas can be found in the Arctic. Almost all the gasfields are concentrated along Russia's northern coast, mainly at depths of less than 500 metres.

KOMMERSANT

THE NUMBERS

The Northern Sea Route stretches 5,600 km from the Kara Strait to Providence Bay, offering the shortest route between the Pacific and Atlantic oceans.

ged development will take 15–20 years to begin. The Arctic will probably become substantiallywarmerinthoseyears. Will this help the development? The warming is unlikely to make the development easier — it will shorten the ice season in the Arctic rather than eliminate it. WhataboutRussiancompanieswith offshore production technology? Russian companies have zero technology in the Arctic because they have no experience. Gazprom and Rosneft are planning to carry out exploration in partnership with foreign firms. But the problem remains. The technology for drilling in the Arctic is far from perfect, and there’s also a shortage of skilled labour. What’s more, not a single company in the world has the technology to eliminate potential oil spills under the ice. Does it make sense to start developing the Arctic now?

HIS STORY NATIONALITY: RUSSIAN HOMETOWN: MOSCOW STUDIED: BIOLOGY

Chestin graduated from the biology department of Moscow State University in 1985. He also studied environmental control at the University of Manchester. Chestin defended his PhD in zoology in 1991. He has been with WWF Russia since 1994.

Hydrocarbon production in the Arctic is hype that has no economic basis and is dangerous for the environment. Hydrocarbon production could kill the bioresources we actually depend on. Some 90 per cent of the fish we catch comes from the Barents, Okhotsk and Bering seas. GETTY IMAGES/FOTOBANK

RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU

International

GULF NEWS_SUNDAY_MARCH_31_2013

Moscow still hopes for political solution CONTINUED FROM PAGE 1

THE QUOTE

Sergei Lavrov MINISTER OF FOREIGN AFFAIRS OF RUSSIA

Washington insists that the main problem is President Assad and demands his resignation prior to negotiations. Russia insists that both parties to the conflict should be pushed towards negotiations and work out a scheme of their own. Russian-American consultations in Dublin and Geneva have even produced an unofficial draft of a peace plan involving the forming of a transitional government and free presidential elections in 2014. Moscow’s efforts have borne some fruit – Damascus has officially declared its readiness for negotiations with adversaries, including even armed groups. But the SNC eventually found a number of excuses to reject this initiative. Russia has also actively worked with the Arab League and tried to convince it to maintain a balanced position. This issue was discussed during the Russian-Arab Cooperation Forum, held in Moscow in mid-March. But the Russian position found support only among some of Syria’s worried neighbours and Algeria. Later in the month, the Arab League transferred its Syrian seat to the rebels and agreed that its members have the right to arm the opposition. As a result, Russia has become more sceptical towards the Syrian

The most important thing is that all the questions be decided by the Syrians themselves, without pressure from abroad, so that the Syrians themselves decide their own fate and the fate of individual politicians... The situation in Syria is not getting any better, even though all the sides agree that there should be an end to violence and the start of dialogue. But there are many of those who are trying to prevent this, including some outside sponsors of the so-called 'irreconcilable opposition'."

rbth.ru/syria

There are about 30,000 Russian citizens in Syria, mostly women and children. Some have already fled.

opposition. It is concerned that Assad’s adversaries are trying all means to involve other countries in the armed struggle. These concerns are not baseless. According to the press service of the Defence Department, on March 19 Adm. James Stavridis, NATO’s top military commander and head of the US European Command, told lawmakers:“We are looking at a wide range of operations and we are

prepared if called upon to be engaged as we were in Libya.” Moscow is also growing more critical of the external sponsors of the opposition. Lavrov stated that promises of massive foreign aid, including weapons transfers, have strengthened the hardline rebel element eager to change the regime in Syria by force. Thus a political settlement has now become practically impossible.

Experts agree that under the current circumstances, the chances for a political settlement in Syria are small.“Currently it is hard to speak about a political settlement. More and more external players are making efforts to remove the regime – nowadays even the Arab League, which is the only significant regional organisation, acts not according to its statute but in the interests of the Gulf monar-

chies. The international community is being pushed towards the Libyan scenario. We might expect that the League will ask the UN to authorise military intervention,” said Marina Sapronova, professor of the Department of Oriental Studies at the Moscow State Institute of Foreign Relations. “Right now a political settlement in Syria is simply impossible," suggestsYevgeny Satanovsky,

president of the Middle East Institute in Moscow. "External investors that have spent huge amounts of money want the destruction of Al Assad and the Alawites. We should expect a genocide of the Alawites and other minorities, namely the Christians and the Armenians. Such things were common in Syria during Ottoman rule.” However, Russian analysts differ on the future of Syria.“Negotiations are the only solution. The rebels could capture Damascus and kill Al Assad; but this will not end the war, since the Alawites will keep fighting for their survival. Anyway, the parties will have to work out a formula for coexistence,” suggests Sapronova. Satanovsky is much more pessimistic:“I don’t see any bright future for Syria. The country is facing ‘Lebanisation’ – different religious and ethnic communities are fighting each other. In Lebanon, peace was restored due to a massive Syrian military presence, but there is no such force in Syria. This war could go on for years. Most likely that Syria will cease to exist as a state.” He explained that this is a part of a larger process. “This is happening not only in Syria but in the whole region. States created artificially by the colonial powers are beginning to fall apart one by one."

QUESTIONS & ANSWERS

Rosoboronexport satisfied with IDEX

MrDimidyuk,whatwereyoushowing for the first time, and what were you particularly focusing on? The main focus was on groundbased equipment. Uralvagonzavod

showed its latest developments for the first time – the modernised T-90S tank and the BMPT tank support fighting vehicle – in a static display. The UAE has asked us to leave our T-90S demonstration model for trials. As expected, there was also a lot of interest in Russian anti-aircraft weapons. How is our military equipment cooperation with the host country – the UAE – developing? Things are stable. No big breakthroughs, but the work continues. There are meetings of the intergovernmental commission every

year, and areas of future work are mapped out. The plan to modernise the infantry fighting vehicles BMP-3 is one major current project I could mention. There’s been a lot of talk recently about contracts with Saudi Arabia. What’s happening with these? The contracts have been discussed and virtually all of them have been initialled, but so far the Saudis are saying nothing. We reckon they’ve taken some kind of time-out. I don’t know what’s preventing positive development of the situation, but the contracts

are all drawn up. We’re waiting. What do they cover? A lot: tanks, infantry fighting vehicles, armoured personnel carriers, helicopters, Smerch multiple rocket launchers – a long list.

REUTERS

This year, 35 Russian companies presented their products at the exhibition. More than 300 specialists from various countries and about 15 official delegations visited the Russian stand. Nikolai Dimidyuk, delegation head and director of special assignments for Rosoboronexport, told us how the market reacted to Russian weapons and military equipment.

Russian-made infantry fighting vehicles serve the Emirati military.

You’ve been to all the IDEX exhibitions. What’s your overall impression of the current exhibition? Some 15-20 arms exhibitions take place in various regions around the world, but the IDEX exhibition remains the leading event.The hosts here took exceptional interest in the Russian display.

Mr Dimidyuk, what can you say about the overall impact of the exhibition? We’ve touched base with a lot of our client countries. Judging by the way the market has reacted to our arms and military equipment, our priorities are still aeroplanes,

together with helicopters and anti-aircraft defence systems. www.rbth.ru/45585 Prepared by Mikhail Khodarenok, Voyenno-Promyshlenny Kuryer

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Opinion

GULF NEWS_SUNDAY_MARCH_31_2013

RUSSIA'S PRAGMATIC STANCE ON SYRIA

IORSH

Mark Galeotti POLITICAL ANALYST

re the Russians really desperate to keep Syrian leader Bashar Al Assad in power? PresidentVladimir Putin says that his“position is not to back Assad and his regime in power at any price.” So why are so few in the West willing to believe him? In December, Putin stated during his marathon press conference that after 40 years of rule by the Assad family,“the need of change is certainly on the agenda.”Indeed, back in 2011, then-President Dmitry Medvedev warned that “a sad fate”awaited Assad unless he take steps to reform his government. The Syrian-Russian relationship has historically been a close one. Damascus has bought Russian weapons and Russian companies Stroitransgaz and Tatneft are major players in Syria’s energy industry. Trade between the two countries jumped 58 per cent in

2011, before the present crisis. But this has been an essentially pragmatic relationship. Russia’s current position is equally pragmatic rather than, as so many in the West believe, somehow ideological, an axis of authoritarians. Moscow is driven not by affection for the current regime so much as a fear of what may follow its fall. The experience of Afghani-

Maybe there is a cosy dacha in Barvikha outside Moscow even now being prepared for the Assads… stan, Iraq and Libya suggest that it is far easier to break states than to build them. Afghanistan is now a teetering kleptocracy likely to be torn between Taliban and opium warlords once the West withdraws. Iraq is drifting towards authoritarianism and sectarian-

ism. Libya is a mess that jihadists are seeking to exploit. In that context, Moscow’s concern is that the collapse of the Syrian regime will lead to a period of anarchy from which the only beneficiaries will be Islamic extremism, Iran and Turkey – three of the main challenges to Russian authority along its southwestern rim. The Russian government denies that it believes Assad’s days are numbered. When Deputy Foreign Minister Mikhail Bogdanov said he might be ousted, there was some hurried backtracking. In reality, though, it increasingly feels that the question becomes when and how the regime changes, not if. What Russia hopes is that this change can be gradual and managed. In his recent talks with UNArab League envoy Lakhdar Brahimi, Foreign Minister Sergei Lavrov said that without“a stable political process,”Syria faced“Somalisation.” At present any such deal looks unrealistic, though. The Syrian opposition is not in the mood to com-

promise, something underlined by Syrian National Coalition leader Ahmed Moaz Al Khatib’s refusal to come to Moscow for talks. Meanwhile, despite pressure from Lavrov, Assad is unwilling to envisage any meaningful talks. After all, it is inevitable that a precondition for any real negotiations would be his departure. In that context, Moscow is playing what limited cards it has left in its hand. It is sending naval forces to the area but not, as some suggest, as part of some bid to support Assad or deter the West. This flotilla contains just three warships: a missile cruiser that dates back to the 1980s, a 1960s vintage destroyer and a relatively modern but small frigate. War-fighters? The first two were designed to fight other ships and the third, submarines – and the rebels have neither. On the other hand, the force also contains five almost empty troopships with a small force of naval infantry. This is a flotilla meant not to fight but to evacuate the thousands of Russians in Syria (and maybe the Assad family) if needs must. After all, according to senior opposition figure Haitham Al Maleh, Russian citizens are now considered legitimate targets. Meanwhile, Russia is politically preparing for the worst, rebuilding some burned bridges with Turkey and reading its concerns into the record. If Syria does descend into chaos and become a new cradle of jihad, at the very least Russia will have the meagre consolation of being able to say that it told the West so. But Russia’s final service to some kind of resolution may yet be to help ease Assad out of Damascus. Lavrov has admitted that Assad has“repeatedly said, both publicly and in private... that he is not planning to leave.”But while most dictators are prone to bloodthirsty and intransigent rhetoric, very few will truly fight to the death if presented with an escape route. If Moscow’s reluctance to demonise Assad means that ultimately it can induce him to flee and allow a successor to try and reach some deal with the opposition, then that will be a better contribution to change in Syria than any number of assault rifles smuggled into rebel hands. Maybe there is a cosy dacha in Barvikha outside Moscow even now being prepared for the Assads… Mark Galeotti is Professor of Global Affairs at New York University.

OBAMA'S POLICY CONUNDRUM Fyodor Lukyanov POLITICAL ANALYST

arack Obama is back in the White House. A second term tends to be a time when heads of state think about their legacy, and President Obama is no exception. Inside America it seems public opinion is polarised like never before; contradiction between the parties has become especially marked. Obama will have to fight Congress down to the last dime when it comes to financial or budgetary issues, and he faces an ongoing struggle to defend one of his foremost concerns to date – the American healthcare reform act. The general consensus is that

Obama is hoping that Moscow will assist America in solving some of its most pressing issues Obama’s place in history depends on whether he can lead the country back towards economic growth. As for US foreign policy, it seems Obama fully intends to base it on his own comprehension of the international system. Just like any American president, Obama assumes the USA’s global leadership as an axiom, but he understands that the situation has changed. The current US President does not support outright hegemony, and neither is he a fan of aggressive intervention policies. Obama prefers diplomacy, and is keen on multilateral organisations, which can help America to share part of its burden and responsibility. However, Obama’s first term has shown that understanding the situation does not necessarily mean knowing how to act. Since the end of the 2000s the USA’s foreign policy has become more and more reactionary; the Obama Administration tends to act in response to stimuli, as opposed to proposing strategic plans. But the American leadership cannot admit this, as this would be the same as ad-

TOUGH YEAR FOR NATIONAL DIPLOMACY Alexander Gabuyev JOURNALIST

n 2013, Russia faces some severe challenges on the foreign policy front. Its ongoing integration with Belarus and Kazakhstan is fraught with problems, the European gas market is becoming less pliable, and the Asian market is still unable to pick up the slack.

The Eurasian Union Officials are unanimous that the main leitmotif of foreign policy this year will be the strengthening of the tripartite alliance between Russia, Belarus, and Kazakhstan. The Customs Union, which has since morphed into the Single Economic Space, intends

in 2015 to rebrand itself as the Eurasian Economic Union (EEU), a post-Soviet analogue of the EU. President Putin considers the EEU just about the most important project of his third term. But unforeseen complications have arisen in dealings with Kazakhstan. "The attitude of our elite to the whole project of Eurasian integration is gradually changing. They used to be sure that the country would benefit from lower taxes, but now the picture is less clear," said a source close to the government of Kazakhstan. Moscow and Astana will have to seek some kind of formula of interaction, centred on economics; otherwise another megaproject will fall on the shoulders of the Russian treasury.

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Challenges in Europe Perhaps the toughest test of Russian diplomacy lies to the west.The "shale revolution" in the US has changed the face of the European gas market. Middle Eastern liquefied natural gas (LNG), once bound for the US market, is now finding its way to the EU, forcing down prices on the spot market. Gazprom has seen its positions undermined, and its share of the European market is steadily falling. Russia risks losing a significant source of budget revenue. Therefore, Moscow's priority should be to strengthen ties with Europe and map out a common understanding of where the energy sector is moving.

An Oriental twist Another critical issue for Russia

is how to enter Asia's burgeoning hydrocarbon markets. This could provide Gazprom and Russian oil compa]nies a viable alternative to Europe. The main problem here is, of course, lack of transport infrastructure. Negotiations on the construction of two gas pipelines to China began in 2006, but the two sides have yet to see eye to eye. The reason is that Gazprom is still demanding that China pay the same price it gets for raw materials under long-term contracts with European customers. But given the availability of cheaper options, the Chinese are in no hurry to commit themselves. Another big problem is investment, without which the development of mineral resources in Eastern Siberia and Russia's Far East

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looks infeasible. There is no traction at all on this matter, not even at a purely formal level. For instance, Russia's leaders ignored the East Asia Summit for the second year in succession. That was despite Barack Obama, Wen Jiabao, and the leaders of Japan, South Korea, Australia, and the ten ASEAN countries all finding time to attend.

The growing force of "soft power" Over the past year, Russian authorities' interest in "soft power" has increased dramatically, especially President Putin's. This tool caught the Kremlin's eye during the Arab Spring. Charged with tackling this issue will be the upgraded Federal Agency for the

mitting that America is not a leading world superpower, but a normal country; it may still be the strongest one out there, but in the face of these volatile and unpredictable processes, it is just as helpless as all the others. At the start of Barack Obama’s second term, US-Russian relations are hard to fathom. Russia is not high on the country’s list of priorities, but it is important to the president personally, because Obama is hoping Moscow will assist America in solving some of its most pressing issues. Neither the White House nor the Kremlin wanted an open conflict, but towards the end of 2012 tension flared up. This was all to do with the Magnitsky Act and Russia’s response to it. The atmosphere is tense, but there are no objective reasons for this. There is no indication that this bad feeling will be exacerbated – the December tensions will cool down. They’ll leave an unpleasant aftertaste, but the situation will not develop into anything more serious. Washington is hoping, in essence, for "Reset-2" – a continuation of the dialogue on subjects that achieved relative success in 2009-2010. And it is primarily hoping for further nuclear reduction. But these hopes are likely to be in vain, because Russia is not open to new agreements in this area – we are quite happy with the situation as it is, thank you very much. This is the state of affairs as it was back at square one, and it’s still unclear how to find a way out. Negotiations on strategic stability remain pivotal to the whole relationship; no other subject can detract, or distract, from the importance of this one. What happened in the 2000s shows that when one of the sides (in this case the Bush administration) loses interest in nuclear reduction, there is a potentially dangerous disintegration in bilateral relations. Everyone is sick and tired of counting and comparing warheads, but a good alternative is yet to be proposed. Fyodor Lukyanov is Editor-inChief of Russia in Global Affairs magazine; Chairman of the Council of Foreign and Military Policy.

Commonwealth of Independent States, Compatriots Living Abroad and International Humanitarian Cooperation (thankfully shortened to Rossotrudnichestvo). The department's reform plan calls for a sevenfold increase in its budget — from 1.4 billion rubles ($46 million) per year to nearly 10 billion rubles ($330 million). But last year the entire project was struck a mighty blow. The main item on the international media agenda in 2012 was the case of Pussy Riot. Clearly, Russia has a lot of work to do to improve its image over the coming years. But this requires nationwide reform and, as taught by Joseph Nye, a reality that other countries find attractive. Such miracle-working is as yet beyond even the most skilled Russian diplomats. Alexander Gabuyev is deputy editor-in-chief of KommersantVlast and a Sinologist

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Feature

GULF NEWS_SUNDAY_MARCH_31_2013

Religion The deaf are studying Islam in Moscow's Memorial Mosque on Poklonnaya Hill

RECIPE

Learning to understand the Quran without words

Pryaniki: a perfect teatime snack Irakli Iosebashvili SPECIAL TO RBTH

Moscow is now offering courses in Islam for the deaf at the Poklonnaya Hill mosque. It is hoped that sign language interpretation will accompany religious services there in future.

Students interact purely by using sign language and text messages.

They improve your mood and give you a more positive outlook on life; both are believed to have remarkable medicinal properties, recommended as a folk cure for everything from bronchitis to boils, and it would be unthinkable for most people to drink either without a zakuska (snack). But here's where the similarities end: while a fiery shot of vodka is most commonly chased with something pickled, a warm, reassuring cup of tea requires something equally comforting, and that's where the pryanik comes in. A pryanik is a traditional Russian gingerbread cake often served beside your teacup. The simpler ones look like thick biscuits coated in white frosting, while more elaborate varieties, like the famous Tula pryaniki, come as loaves and are often stamped with a wooden press to produce elaborate surface decorations.

NATALYA BERISHVILI

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People with speech and vision impairment were first offered the opportunity to study Islam and Arabic in 2012. The main goal for students on the course is to learn Arabic, to be able to read the original text of the Quran.

The courses are the brainchild of sign language interpreter Jamilya Zenina. "I know many deaf and mute people. They kept asking me to come to churches, synagogues, mosques, to interpret services for them," Zenina says. As a Muslim, she decided to offer Islam courses to people with impaired hearing. The only problems were a lack of room and Islamic education. In spring 2012 Zenina metYulia Zamaletdinova, a graduate of the Moscow Islamic University, who had been volunteering at a blind people's association. Together they managed to reach an agreement with the director of the madrasa at the Poklonnaya Hill mosque. In October 2012, Muslims with speech and vision impairment were first offered the opportunity to study Islam and Arabic. Soon after, Aisha Karimova, who was raised in a mute family, joined the teaching staff. Though she has no hearing or speaking impairment, she knows sign language. Classes are held on Sundays.The latest class was attended by about ten people, all of them young men. They interacted purely by using sign language and text messages. Karimova helped a reporter from the Moskovskie Novosti daily to talk to a student named Mousa. He told the reporter that he was a physical education student, and had come to Moscow from Dagestan. Mousa was raised in a religious family and none of his relatives has any hearing or speech impairment. He decided to take the Islam courses for the deaf to learn to read the Quran. "The main goal for all of our students is to learn Arabic to be able to read the original text of the Quran," Zamaletdinova says. According to her, society is not very welcoming to the deaf. "Some

MOSKOVSKIE NOVOSTI

Only in the last century has the pryanik been thought of as merely an ideal tea accompaniment. In olden times, they were an indispensible part of every festive occasion, baked for births, holidays and weddings. Traditionally, newlyweds took a pryanik to the bride's parents several days after their marriage. Pryaniki were in such demand that they spawned a profession - pryanichniki were respected craftsmen who passed secret family recipes from one generation to the next. For reasons unknown, Tula, a few hours' drive from Moscow, became the pryanik-making capital of Russia. Here, in the 17th and 18th centuries, the best pryanichniki brought the art form to its apogee, creating pryaniki of every conceivable shape. The famous Tulsky Pryanik museum still stands in Tula today. Enjoy this classic pryanik recipe, straight from the museum's books. And don't forget that cup of tea!

LORI/LEGION MEDIA

Currently classes are attended by about ten people.

The Christian experience The Orthodox Cathedral of the Tikhvin Icon of Our Lady on Vostochnaya Ul. has been offering sign language interpretation at its services since 1991. Services are held in both verbal and sign languages.

ANNUAL INVESTMENT MEETING (AIM) 2013 APRIL 30-MAY 2, THE DUBAI INTERNATIONAL CONVENTION AND EXHIBITION CENTRE , UAE - DUBAI

Ingredients Cake: • 1 1/2 cups flour • 1/2 cup honey • 1/4 cup butter • 2 tablespoons baking soda • 1/4 tablespoon each cardamom, ginger and cinnamon • 1/2 cup thick jam (any flavour) • 1/2 cup water

Dough Add melted honey, butter, baking soda and cinnamon to dough, knead as necessary. Sprinkle flour on a flat surface, then roll dough to a thickness of no more than 1/3 inch. Cut dough into rectangles. Spread a generous tablespoon of jam into a rectangle of dough, then cover it with another rectangle, sealing the edges to prevent leakage. Put on greased baking sheet and bake for 10 minutes at 180 degrees C. Bake for 5-10 more minutes at 160 degrees. Glaze with sugar syrup when cool.

PhDs have published papers discussing how in Islam a deaf person is a person of the lowest rank, and the birth of such a baby causes great grief for the family. Many people insist that this attitude originates from the religion. But that is not true," says Zamaletdinova, pointing out that a deaf or mute Muslim is allowed to speak the words of the Quran indistinctly, and a blind Muslim is allowed to keep a guide dog at home.

While reading the Quran is less of a hurdle for the deaf in Arabicspeaking countries, knowledge of sign language and access to speech therapy remains vital. In the UAE, Abu Dhabi Education Council reported in February that nearly 60 speech therapists and teachers had completed a training programme to help pupils with impaired hearing, while in 2010 Dubai's Knowledge Village ran a 30-day course in American Sign Language.

BATIMATEC 2013

MININGWORLD RUSSIA 2013

ELECTRO 2013

ARABIA-EXPO 2013

MAY 4-7, PALAIS DES EXPOSITIONS DES PINS MARITIMES, ALGIERS - ALGERIA

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MAY 30-JUNE 1, LENEXPO, ST. PETERSBURG - RUSSIA

Preparation For sugar syrup: bring the water to a boil. Dissolve the sugar into the boiling water. Once the sugar is dissolved completely, remove the pan from the heat.