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Technology Top 5 Russian innovations at the MAKS-2013 airshow P.05

Culture Children's pictures promote tolerance all over the world

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

P.06

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Economy Key deals lay future foundations for UAE-Russia investments and trade

Why is Russia so tough on Syria?

New grounds for cooperation The ongoing evolution of UAERussia business relations means the two nations are now looking towards the long term.

Following the key deal between Russia and the US, Syria has agreed to abandon its chemical weapons stockpile. Yet what exactly are the Kremlin's motives?

YEKATERINA POKROVSKAYA SPECIAL TO RBTH

NIKOLAY SURKOV RBTH

was announced at the 2013 St. Petersburg International Economic Forum. In December, 2012, Russia’s largest bank, Sberbank, and the UAE’s Invest AD, a subsidiary of the Abu Dhabi Investment Council, the UAE sovereign wealth fund holder, signed an agreement to cooperate on investment in the Russian and Middle East markets.

Many question why Moscow continues to defend Syrian President Bashar Al Assad, a man who Western media paint as a bloodthirsty dictator and war criminal. Pundits quote Russia's geopolitical ambitions and multibillion-dollar arms sales. But a closer look reveals a different picture. Firstly, it should be understood that the presumed strategic alliance between Russia and Syria is a myth. Their relations have always been of a pragmatic nature. In fact, relations were frozen during the 90s and remained that way until 2005 because of Syrian debt, which had reached $13.4 billion. Damascus wanted it relieved while Moscow demanded cash for arms and other export goods. After the debt issue was resolved in 2005, most of it was written off and only about $1.5 billion was directly invested in joint projects. Only then did trade and military cooperation resume. Although Syria paid about $2 billion to modernise its Soviet-era arsenal, by then Russia was no longer Damascus' sole client, as it had been in the Cold War -Syria now had other sponsors and lacked the military and political clout needed to promote Russian interests in the region. Even at the UN Russia did not always back Syria – in 2005 Moscow voted for the withdrawal of Syrian troops from Lebanon.

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Business cooperation between Russia and the UAE is expanding into mutual investment projects that lay a foundation for the exchange of innovative ideas and practices through business partnerships. These partnerships include joint projects in nuclear power, renewable energy, sea, ports and road infrastructure, tourism and other areas. According to the UAE Federation of Chambers of Commerce and Industry, UAE investments in Russia are estimated at AED 81 billion (US$ 22 billion). The UAE has recently committed to investing up to US$5 billion into Russian transport infrastructure, as Mohammad Bin Zayed Al Nahyan, Crown Prince of Abu Dhabi and Deputy Commander of the UAE Armed Forces, on behalf of Abu Dhabi Department of Finance and Kirill Dmitriev, Head of The Russian Direct Investment Fund (RDIF) signed a memorandum of cooperation on September 12, 2013 in Moscow. The US$5 billion represents the largest investment made by the UAE into the Russian economy so far. According to RIA-Novosti, the investment will take 7 years to complete and financing of the Russian infrastructure will come on a project-by-project basis. The projects will include a fast-speed train line between Moscow and Kazan, construction of the Moscow city ring road in Moscow’s

Crown Prince of Abu Dhabi and Deputy Commander of the UAE Armed Forces Mohammad Bin Zayed Al Nahyan (l) visited Moscow in early September for bilateral talks.

The UAE has recently committed to investing up to US$5 billion into Russian transport infrastructure.

other important UAE-Russia cooperation agreements. Also, in June this year, the Abu Dhabi-based Mubadala Development Co and RDIF set up a coinvestment fund, with each party pledging to contribute US$1 billion. The fund has been set up to cover long-term investment opportunities across a range of industry sectors in Russia, and projects will be financed on a deal-by-deal basis. The agreement

outskirts and an overhaul of the Trans-Siberian railway. The rise in investment appetite has been fostered by the ratification of the UAE-Russia Agreement on Securing Bilateral Investment at the end of last year, as well as by the launch of RDIF (the Russian Direct Investment Fund), created to give major foreign investors reassurance through sharing investment risks with them. These events also spurred the signing of

IN THIS ISSUE

Culture Film festival focuses on the interaction of cultures and civilisations

Islamic cinema takes centre stage Held in the capital of the Republic of Tatarstan since 2006, the star of the Kazan International Festival of Muslim Cinema is rising. GLEB POSTNOV SPECIAL TO RBTH

EGOR ALEEV

The Russian city of Kazan's reputation as a film forum has been lifted to the heights of Berlin andVenice by renowned Russian director Karen Shakhnazarov, who headed the jury. The festival programme abounded with high-quality pictures from Russia, Iran, Syria, Turkey, Saudi Arabia, as well as France, Germany, Italy, and other Eastern and European countries where Islam is present or predominant.

The capital of Tatarstan aims to become a centre of Islamic culture.

For each metropolis

For each strip of taiga

For each supermodel

For each of you

From the 50 films that made up the body of the programme, Shakhnazarov's jury chose the best ten. The main prize — a golden statuette depicting the Syuyumbeki Tower (a legendary tower inside the Kazan Kremlin that bears the name of the last Tatar queen) — was awarded to Serbian director Srdan Golubovich for "Circles," a portrayal of the groping efforts to find a fragile peace amidst the chaos of a bloody civilian massacre in a sectarian war. Egypt's Hala Lotfi won the prize for best director of a feature film for her film "Coming Forth by Day." The award for best screenplay was given to Iranian duo Marjan Ashrafi Zadeh and Ali Asghari for the film "The Wet Letters." The best featurette was the Kazakh picture "Father." CONTINUED ON PAGE 6

Special report

You need to be one of the world's largest producers of the metal to have a heart of gold. P. 04

there is an off-the-beaten-track village.

there is a new techno-park.

RBTH for iPad

there is a CEO.

there is a Russia of your choice.

RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_MONDAY_SEPTEMBER_30_2013

Politics&Society

Elections Russia's opposition puts on a strong showing in recent local elections

Fight against corruption is a vote-winner Battling graft has emerged as a rallying cry for Russia’s opposition, yielding victories at the ballot box. Analysts hope the business climate stands to profit. ARTEM ZAGORODNOV RBTH

In late 2011, Dmitry Bykov, the charismatic Russian TV hostturned-opposition leader, stepped up to the podium in central Moscow and spoke to thousands of Russians who had gathered to protest the alleged rigging of parliamentary elections. “A real civil society has been formed in Russia, and it won't disappear,” Bykov told the cheering throng, whose very appearance belied longstanding assumptions about the apathy of Russian voters.“Never before in Moscow was there such a feeling of unity and determination.” Nearly two years later, Bykov and his allies believe the momentum is still in their favour. Despite widespread approval for President Vladimir Putin in opinion polls, analysts say opposition figures are capitalising on rising frustration with corruption. Pro-business and anti-corruption platforms helped propel opposition figures to previously un-

imaginable recognition and importance in regional elections this month, including a significant showing in Moscow's mayoral vote. “Russia's economic growth and societal development over the last decade has reduced tolerance for corruption,” said Dmitry Butrin, business editor at leading daily Kommersant. The electoral results will put pressure on the Kremlin to keep Russia’s economy healthy, said Chris Weafer, Senior Partner at Macro Advisory, a Moscow-based research consultancy. “The protests of late 2011 and early 2012 are finally starting to deliver a positive legacy,” Weafer said. “Investors, far from fearing the political trends may lead to instability, should be much more encouraged that this process of change may soon start to add a greater focus on promised, still slow-moving, reforms.” Anti-corruption activist lawyer Alexei Navalny initially gained prominence after alleging the theft of billions of dollars from major state-owned corporations. This month, he emerged as the de facto leader of Russia's fragmented opposition after garnering an impressive 27 per cent in Moscow's mayoral elections, taking second place.

Opposition parties have adopted a strong stance against corruption to win support among voters.

The electoral results will put pressure on the Kremlin to keep Russia's economy healthy Navalny has filed a suit, claiming electoral fraud. But many Kremlin critics said the elections appeared to have been more open than expected. “I was impressed. Fair elections have returned to Moscow,” wrote

Yulia Latynina, Kremlin critic and talk show host, in Moscow’s English-language daily newspaper,The Moscow Times. In the Urals city of Yekaterinburg, prominent anti-drugs campaigner and politician Yevgeny Roizman, from billionaire Mikhail Prokhorov's Civic Platform party, upset the pro-government candidate to win the mayoral election. An opposition candidate also won the mayor’s seat in Petrozavodsk, capital of Russia's Karelia region.

Why is Russia so tough on Syria? CONTINUED FROM PAGE 1

The notion that Moscow is protecting murderers of innocents while the West champions brighteyed freedom fighters is another popular myth. In reality there have been as yet no unbiased international investigations of the events in Syria. Neither the Arab League nor the UN can place sole blame on the government, which most likely used excessive force in the early days of the crisis, but whose actions have since been equalled in cruelty by its adversaries. From a political standpoint, for Russia, Assad’s government is a minor evil. Moscow sees its deficiencies and has consistently called for reforms. But a rebel victory is likely to plunge Syria into chaos that will engulf the whole region. Last but not least is the wider geopolitical perspective. Since 2003, Russia has watched the US and its allies meddle in Middle Eastern affairs, embark on military interventions, arrange and sponsor revolutions. This has left no real legacy of democracy in Iraq, Afghanistan or Libya, just casualties and instability. Vasily Kuznetsov, assistant professor in the faculty of world politics at Moscow State University, told RBTH that Russia is defending not only Al Assad but the established philosophy of international relations and the concept of sovereignty.“Moscow is also trying to maintain stability in the Middle East for the sake of its own security. Otherwise the chaos will spread and hit Russia’s southern regions. I mean the spread of radicalism”, explained the expert. According to Kuznetsov, there are numerous reasons to believe that the crisis will undermine regional stability:“Firstly, interven-

Interventionism has left no real legacy of democracy in Libya, Afghanistan or Iraq, just casualties and instability. tions in Afghanistan, Iraq and Libya only led to an increase in violence. Secondly, military intervention automatically rules out a political transition. Finally, the opposition is fragmented and is full of radicals linked to Al Qaida”.

In Moscow, Navalny led a USstyle grassroots campaign, delivering over 100 speeches in the month before the vote. His slogan read: “We'll change Russia. We'll start with Moscow.” However, Putin's popularity remains steady. The Levada Centre, Russia’s respected independent polling agency, put his approval rating at 65 per cent in July. Leonid Polyakov, Head of the General Political Science Department at the Higher School of Economics, says the public’s rising

frustration with corruption could have long-term economic benefits. “Fighting corruption was a priority for many politicians who attracted support from voters, so pressure on corrupt officials is likely to increase,”Polyakov said.“The fact that the elections were conducted fairly and openly also raises the legitimacy of the entire political system. Nothing will be turned upside-down overnight. But both these factors will have a positive effect and provide new opportunities for business."

There is one more dimension to the crisis that means Russia is unlikely to stay out of it. About 30,000 Russian citizens remain in Syria, mostly women and children from mixed families. If the rebels win, all of them will be in danger. Marina Sapronova, professor at Moscow State Institute of Foreign Relations, believes that Moscow’s stance cannot be based only on economic or military interests.“Bilateral trade is insignificant - only about $2 billion. Syria is not a major buyer of Russian arms - in that respect India, China and Venezuela are much more important”, she says.“Yet Russia cannot ignore the fact that Syria has become a training ground for militants who may later reappear in Chechnya or Dagestan and provoke a new surge of terrorism.”

Russia to offer 72-hour visafree travel for transit tourists

Russian naval ships in the Mediterranean

Proposed plan will allow transit passengers who fly through Moscow to stay in Russia for three days without a visa. DARYA GONZALES RBTH

According to a draft bill approved by the Government Legislative Commission, foreign nationals arriving in Russia in transit from specific countries (a list to be approved by the Russian government) and via international airports for the purpose of tourism will be able to stay in Russia for up to 72 hours without a visa. Thus, while waiting for their flights, tourists will be able to leave the airport to visit the city. For now, the 72-hour visa exemption will apply only to tourists flying into Moscow, St. Petersburg, Kazan and several other cities. However, it is possible that the plan may be expanded in the future to cover other parts of the country. The bill is expected to pass through parliament before the end of the year. Its adoption will help promote an increase in inbound tourism through the Moscow transportation hub.

How to arrive without a visa Passengers who wish to stay in Russia for 72 hours without a visa must have proof of identity, authorisation for entry (if required), medical insurance for the duration of their stay in Russia and proof of a hotel or tour booking. A separate requirement is that the tourist must fly out of Russia on a Russian airline. To receive visa-free transit for 72 hours, the passenger must“present an airline ticket from a Russian carrier with the confirmed time of departure.”

RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_MONDAY_SEPTEMBER_30_2013

Trends A host of factors is pushing currency down but there may be a silver lining.

Falling ruble to boost industry, state coffers

CORBIS/FOTO SA

Experts believe that the falling ruble should help local vendors to capture the Russian consumer.

Economists predict downward pressure on Russia’s currency will boost tax revenues and provide a fillip to carmakers and local vendors. This time, oil exporters will miss out on the party. ARTYOM ZAGORODNOV RBTH

Russia’s falling ruble may provide a boon for government coffers and a bonanza for the nation’s car industry and other vendors, prompting Russians to buy local as the currency hits its lowest level against the dollar in four years.

A host of factors have combined to push the ruble down, from fears about the end of quantitative easing by the US Federal Reserve to statements by Russian Finance Minister Anton Siluanov that a weaker ruble would have economic benefits for Russia. Sluggish performance in the European Union, Russia’s largest trading partner, and less-than-rosy forecasts for GDP growth have also had an effect. But unlike the historic ruble devaluation of 1998, when Russia’s oil companies booked windfall

ruble profits by selling crude in dollars, new tax rules mean the state will collect most of the surplus oil profits this time. Domestic firms that target the Russian shopper, on the other hand, should get a lift, as Made in Russia becomes more competitive. “The costs of imported goods will increase, and one of the biggest winners will be Russia’s burgeoning auto industry,”said Chris Weafer, founding partner of Moscow-based Macro Advisory.“Russia’s auto market will soon overtake Germany to become the

largest in Europe.”Carmakers that may benefit include local giants VAZ, GAZ and Sollers. At the start of 2013, the ruble traded at around 30 to the dollar. Today it trades at around 33 per dollar, though some economists predict the currency may sink to as low as 37 per dollar by the end of the year, especially if the price of oil, Russia’s main export, falls. The ruble is only partly freefloating. The currency is allowed to trade within a range against a dollar-euro basket set by the Central Bank of Russia, which has spent $11 billion propping up the currency since this spring as it allowed the band to slip, according to Bloomberg. Russian policymakers aim to allow the currency to float freely by 2015. “In 1998, Russian oil companies paid almost nothing in taxes,” Weafer said.“Today the combined tax burden approaches 90 per cent. So the real beneficiary is the state budget.” Tax receipts from oil exports provide a buttress to Russian sovereign debt, Weafer said, creating a possible opportunity for yieldhungry investors looking for fixed income with low risk. The falling ruble should provide local vendors a hand in capturing the Russian consumer, a group that is increasingly targeted by global retailers as rising incomes boost purchasing power in Europe's largest country by population. A recent World Bank study ranked Russia as Europe’s largest economy, and the world’s fifthlargest in terms of purchasing power parity. “Nowadays, the disposable income of the average Muscovite exceeds that of the average Houstonian,”said EdwardVerona, former President of the US-Russia Business Council.

QUESTIONS & ANSWERS

Transaero charity flights to reach UAE the "Flight of Hope" programme, which will help to promote a culture of charity and give passengers an opportunity to do a good deed. The funds raised from the flights will go to the Life Line Fund, and donors will be able to keep track of how their money is spent simply by going online.

Soon, Transaero Airlines fleet will be joined by an unusual aircraft: a Boeing 747 covered with coloured handprints. This plane will perform the "flights of hope," during which passengers will be able to make donations to help children with heart, brain and spine diseases. The meaning of the palm prints is simple — passengers are offering a helping hand to children in need. And the first to lend a hand was Transaero CEO, Olga Pleshakova. Olga, what prompted your company to take part in this charity action? Transaero is aware of its social responsibility and has been involved in charities since 2007. Now, in cooperation with the Life Line Fund, we are about to launch

Who came up with the idea for the design of the liner? The idea of in-flight donations was proposed by the Lifeline Fund, and we offered to provide a special plane for the "flights of hope."

Transaero's CEO Olga Pleshakova was the first to leave a handprint.

Whichrouteswillthe"flightsofhope" cover? To begin with, they will fly to Russia's Far East and the US. I also plan to take the "Flight of Hope"

plane to the US in December. After that, we will begin to operate this plane on other key routes. One of them is Dubai, which we made a regular destination. Why were there no scheduled Transaero flights to Dubai before? The airline ran chartered flights to Dubai for more than a decade, and ranks first among Russian airlines in terms of passenger traffic between Russia and the UAE. This spring, the Ministries of Transport of Russia and the UAE agreed to assign a second carrier on each part. It allows us to sell tickets not only as part of travel packages, as before, but also by retail through our website and agency network. Hence, passengers will be offered a choice of four classes of service: first (Imperial), business, economy and tourist. Indeed our Imperial class service, is a unique product. In developing this class of service, we held firm to the traditions of the Russian Imperial Court. Nikolay Surkov, RBTH

Finance Tatarstan may become a centre for attracting capital from Islamic countries

Kazan welcomes Muslim investors The Tatarstan Investment Development Agency (TIDA) has developed a five-year plan for the creation of a Regional Centre for Islamic Finance in Russia and the CIS. TATIANA LISINA SPECOIAL TO RBTH

According to estimates developed by Thomson Reuters, during this period the CIS countries could raise about $28 billion in investments from Malaysia and Gulf states. To coordinate the financial

flows, the developers plan to create a regional regulatory bank in Kazan. According to the press service of TIDA, “The main objective of the project is to stimulate the development of Islamic finance in the Russian Federation by providing an alternative to traditional banks, not just for the Muslim population, but also for people of other faiths. Moreover, Islamic financial instruments are a means of attracting investments from Muslim countries.”

It is quite clear why Kazan has been chosen as the hub for Islamic investments. Tatarstan has accumulated considerable experience in international projects and contacts with investors from Muslim countries. Kazan has repeatedly hosted major international events devoted to Islamic business and finance. Support and widening of investments will be one of the key issues at the upcoming Fifth International Economic Summit of Russia and the Countries of the

OIC, which will be held in the capital of Tatarstan in October. According to experts, Islamic investors are showing interest in Russia due to both economic and geopolitical factors. Alberto Brugnoni, chairman of the Italian nonprofit organisation ASSAIF, says: “Muslim investors simply cannot ignore Russia due to its huge size, its raw material resources, the size of its Muslim population and its proximity to several strategic Muslim countries in Central Asia.”

Economy

New grounds for cooperation CONTINUED FROM PAGE 1

Teaming up on energy On December 17, 2012, in Abu Dhabi, Russia and the UAE signed an agreement on cooperation in the peaceful use of atomic energy. Earlier, in August 2012, Tekhsnabexport (TENEX), a stateowned Russian company, undertook to deliver about 50 per cent of the uranium product supplies and enrichment services necessary for manufacturing fuel assemblies for the UAE’s first nuclear plant. First deliveries are planned for 2014. Demand for gas in the UAE is also growing, due to a growth in population and industrial needs. Crescent Petroleum and Rosneft are currently carrying out a joint exploration of gas deposits in a 1,250-square-kilometre zone in Sharjah, UAE. Badr Jafar, President of Crescent Petroleum, highlighted the importance of the UAERussia bilateral relationship: “Together, these two countries ac-

count for 36 per cent of the world’s oil production and 29 per cent of the world’s gas production, and yet we are only just beginning to realise the full potential of this bilateral relationship. In a globalised energy and logistics world, the UAE and Russia are natural partners.”

UAE to invest in sea ports UAE-Russia bilateral investment and trade is also expanding into sea and port infrastructure. According to Jafar, who is also the managing director of the Crescent Group and the CEO of Crescent Enterprises, Gulftainer is set to invest over US$300m in the next five years in Russia, thereby increasing its port coverage in the Baltic and the Black Sea areas. Gulftainer has also committed to an investment in the Ust-Luga port, 110 kilometres from St. Petersburg. “The new deep-water terminal is set to become the biggest port infrastructure project in the Russian Federation,” he added.

Global projects THE NUMBERS

5 billion USD The amount the UAE is to invest into Russian port, road and bridge infrastructure within the next seven years

22 billion USD The total of Emirati investments in Russia, according to the UAE Federation of Chambers of Commerce and Industry

Africa is now emerging as one of the most important markets for the UAE. According to Yury Tarilov, Regional Director of the RussianEmirates Business Council (REBS), the idea of using Russian Railways technology and UAE financing for developing rail infrastructure in countries like Sudan and Namibia has found support from Saif Ahmed Belhasa, a cochairman of REBS on behalf of the UAE, and chairman of the Saif Belhasa Group of Companies.

RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_MONDAY_SEPTEMBER_30_2013

Special Report

Metals Already among the world’s largest producers of yellow metal, Russian firms are ramping up production in Siberia and the Far East

Golden prospects for Russia

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In terms of sheer volume Russia could overtake US as the third largest gold-producing country in the world by 2013.

VIKTOR KUZMIN SPECIAL TO RBTH

Last summer, the world’s collection of unique gold ingots gained a new addition. A heart-shaped gold nugget weighing 2.4 pounds was found in Russia’s Irkutsk Region. Irkutsk, located in central Siberia, is the fifth-largest region in Russia and the country’s secondlargest gold-producing area. It is home to one fifth of the country’s gold production facilities. Were it not for the unique shape of the nugget, however, the find would hardly have made the headlines. The weight of the little heart is only a tiny fraction of the 250 tonnes of gold produced in Russia every year. Russia is the fourth-largest gold producer in the world, after China, Australia and the United States, but it ranks second in the world in terms of proven reserves. Although the sector is highly fractured — more than 600 companies work in gold production in Russia — the industry has its major players. The country’s biggest producer is Polyus Gold, which is also one of the top 10 gold producers in the world. According to the official statistics from Russia’s state statistics agency, Rosstat, in 2012 Russian companies increased year-on-year gold production by 8.3 per cent. Polyus, for its part, increased production of refined gold by 12 per cent and is anticipating even better numbers for 2013 — in particular, the

THE NUMBERS

2.4

pounds is the weight of a heartshaped gold nugget found last summer in the Lena-Vitim district of Siberia.

4.9%

is the increase in Russian gold production in the first 11 months of 2012 compared to the same period in 2011.

254

tonnes of gold were produced in Russia in 2012, making the country the world’s fourth-largest gold producer.

company has said it expects to produce 1.8 million ounces of gold in 2013, up from 1.68 million in 2012. The lion’s share of Russia’s gold comes from the extraction of mineral resources, which was up 6.3 per cent in 2012 to 200 tonnes. Gold also comes into circulation via recycling scrap and waste. In the past year, nearly all of Russia’s gold-producing areas reported growth in production. Numbers were particularly strong in the Krasnoyarsk Territory and the Irkutsk, Magadan and Chelyabinsk regions. There was a drop in output at the Kupol Deposit in the Chukotka Autonomous Region in the Far East, but the Prime news agency reported that the decrease was the result of a known reduction in the gold content of pro-

cessed ore there. Gold production is likely to increase throughout 2013, which could result in Russia overtaking the US as the thirdlargest gold-producing country in the world by volume. Commenting on the numbers, Investcafe analyst Andrei Schenck noted that the increase in production was due to more output from existing facilities rather than new ones coming online, and that Russia’s potential for gold production is far from exhausted. “Some projects have been implemented, while others are still at the development stage,”Schenck said. In 2014, production is scheduled to begin at Russia’s largest gold deposit, Polyus Gold’s Natalka. Although Natalka was discovered during World War II, it sat idle for many years due to its remote location in the Magadan Region, in the north of Russia’s Far East. Once production begins at the facility, Natalka will process 11 million tonnes of ore and produce 16.5–22 tonnes of gold per year. A gold mine is also under construction at the neighbouring Pavlik deposit. Another 7.3 tonnes of gold a year are expected to be produced at this site, which is under the management of the metals investment firm Arlan.

From mine to market However, general market instability and the volatility of the gold market in particular have thwarted a number of major deals in Russia. The merger of Polyus Gold and Polymetal International, for example, failed to go ahead, and not a single mining or metals company issued an IPO in 2012. The

SOURCES: U.S. GEOLOGICAL SURVEY AND GOLD AND TECHNOLOGY MAGAZINE

tage of gold held in international reserves will increase as well. Russia, for its part, has been stockpiling gold as a hedge against international financial instability. In 2007, the Russian government held 443 tonnes of gold in its strategic reserves; by autumn 2012, the number had increased to 1,028 tonnes. In 2012, gold prices rose by 7 per cent year-on-year, but some observers say that this level of growth is unlikely in 2013. One of the main factors has been the increased use of the metal to pay for energy supplies between Iran

and Turkey, as well as higher demand from India. Indian jewellery manufacturers are trying to increase their supplies of gold before the import tax is raised this year, according to analysts at UBS. Bogomolova said that demand for gold from Russian jewellery manufacturers is also likely to increase in 2013. According to Bogomolova, while Russian investors do not view pure gold as a way to accumulate capital, individuals consider jewellery to be a good investment while the dollar and euro remain volatile.

QUESTIONS & ANSWERS

“We need to create the right conditions to attract willing investors” Sergei Kashuba, chairman of the Russian Union of Gold Producers, spoke with Alexei Boyarsky of Kommersant-Money about what needs to be done to keep production rates up and how to attract investors to Russia’s gold industry. What drives growth in the price of gold? The main driver is investors at all levels. In times of instability, everyone buys the metal. Demand heats up further when exchange traded funds (ETF) appear in a pre-crisis period, with shares backed up by physical metal. Our Central Bank is also buying up gold: under its own internal regulation, at least 10 per cent of foreign exchange reserves must be held in the form of bullion, and as of July 1, 2012, gold reserves stood at 936 metric tonnes (1,031 tonnes). At the current rate of production, gold should last for more than 40 years. Why are Russian gold producers buying foreign assets? There are no new licences to be allocated. There is one strategic deposit at Sukhoi Log in the Irkutsk Region, but it hasn’t been distributed yet. Other new sites simply do not exist. Over the past 25–30 years, the world has adopted the practice of division of labour. Large mining

KOMMERSANT

Russian gold production by region

government also shelved an auction for Sukhoi Log, one of the country’s largest undeveloped gold deposits. Still, Valentina Bogomolova, a senior analyst for metals and mining at Uralsib Capital, said that the current financial climate bodes well for gold mining in Russia. The global price of gold has increased steadily since 2000, and Goldman Sachs has predicted a rise in the price of one ounce of gold from the current $1,690 to $1,825 by the second quarter of 2013. As a result, it is likely that the percen-

companies that develop ore deposits focus on production, gradually buying up more and more assets. But those same assets — prospected deposits with proven reserves and a ready development plan — are sold by minority shareholders called junior companies. In Mexico, for example, junior companies perform 80 per cent of exploratory drilling; in Canada the figure is 70 per cent; in Russia, just 10 per cent. Why don’t foreign junior companies come to Russia? In the 1990s, there were about 30–40 foreign juniors operating in Russia; but now there are no more than a dozen. Today, according to Russian law, firms more than 25

per cent foreign-owned cannot be awarded licences to large deposits. There are problems associated with converting exploration licences into production ones, which also affect domestic companies.Therefore, such junior companies more often than not look elsewhere. If nothing is done to reverse the trend, in 10–15 years production rates will have dropped significantly. As old deposits become depleted, increasing amounts of ore are required to maintain production levels. We have huge untapped territories in Eastern Siberia. Could there be a new Klondike? The word “suddenly” is not part of a geologist's vocabulary. Before every discovery comes exploration. We need to create the right conditions to attract investors willing to invest in junior companies. Firstly, the regulatory framework needs revising, in particular the issue of converting exploration licences into production ones. Secondly, in the absence of major venture capital funds, the government itself must fulfil the role of anchor investor by setting up a fund or creating a state corporation. Otherwise, Russian geology will see no investment at all, and domestic gold producers will start looking abroad.

RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_MONDAY_SEPTEMBER_30_2013

Science&Technology

QUESTIONS & ANSWERS

Technology New aircraft and aviation equipment were presented to the public in late August The new generation multi-role Ka-62 will compete with the popular Mi-8 and Mi-17 models.

Russian aviation industry spreading its wings worldwide

BORIS YEGOROV

Dmitry Shugayev, deputy director general for international economic cooperation for the state corporation Rostec, told RBTH in an exclusive interview about the corporation’s successes and its strategic plans.

MAKS-2013: Top 5 Russian innovations RBTH spent two days at the MAKS-2013 international airshow near Moscow. We present a selection of interesting innovations from Russia's military-industrial complex. BORIS YEGOROV RBTH

1. A state-of-the-art radar system for a Night Hunter Radio-Electronic Technologies exhibited the NO25E radar system, which is without parallel in Russia and will be installed in the Mi28N Night Hunter helicopter. The principal quality of the new radar system is that the receiving array for the transmit/receive module is located above the helicopter’s rotor blades. On a combat mission and away from shelter, this radar allows the Night Hunter to remain undetected while updating the crew with all the necessary information with split-second timing. Apart from this, the radar can detect objects and weather formations that pose a threat in flight. It warns the crew of the threat and provides them with the coordinates.

2. The Tu-214R: One of the most secret aircraft in Russia As part of the airshow, the Tu-214R was revealed to the general public for the first time. This radioelectronic and optical-electronic intelligence aircraft was developed back at the end of the 2000s and is based on the Tu-214 passenger aircraft. The first photographs of this aircraft only appeared in the media in May 2012. This aircraft is planned for use in the international Open Skies programme, in which participating states have the right to fly over one another’s territory to monitor military activity.

3. Mobile aerostat systems The Dolgoprudny Automation Design Bureau presented mobile aerostat systems that were 645 square feet and 860 square feet in volume. They are intended to monitor given geographical areas. Any cargo up to 33 pounds in weight — such as communication relay stations, analytical equipment, film cameras and thermal imaging equipment, depending on the requirement — can be attached to them and lifted to an altitude of

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The Ka-62 is intended to carry 12–14 passengers in a cabin or a 2.5-tonne load on an external winch system. These helicopters can be used in the petrochemical industry or to carry out rescue operations. It is expected that certification of the Ka-62 will be completed by the end of 2014, while the first batch of helicopters will be delivered to partners in 2015.

As part of the airshow, the Tu-214R intelligence aircraft was revealed to the public for the first time. 1,000 feet. If necessary, these aerostats can be used for military purposes. These systems can be loaded onto any vehicle with a payload of up to 3 tonnes and taken to any geographical location.

5. The Vityaz (Knight) air defence missile system The aerial defence company Almaz-Antey displayed the new S-350E, medium-range, air defence missile system at the airshow. The new generation system works in conjunction with all-aspect radar and a command post based in a BAZ (Bryansk Automobile Plant) vehicle. The armament includes medium-range missiles used in the S-400 airdefence missile system, as well as short-range missiles. In the long term, theVityaz should replace the obsolete S-300, and supplement Russia’s multi-layered missile and air defence system, of which the new S-400 and S-500 systems will also form a part.

4. The first prototype of the Ka-62 helicopter Russian Helicopters demonstrated the first prototype of the new multi-role Ka-62 helicopter at MAKS-2013. This helicopter is fitted with the latest avionics, while the airframe and more than half the blades are made from polymer composites. In the long term, this helicopter can be made compatible with the European satellite navigation system Galileo — a European Union and European Space Agency project in which China, Israel, South Korea, Ukraine and Russia are participating.

What new products did Rostec unveil at MAKS this year? Rostec’s companies, which produce more than 80 per cent of electronics for the Russian aviation industry, presented almost the entire range of equipment used in modern aviation and cosmonautics, including avionics, the newest elements for spacecraft, various optical devices, aeronautical and space communications systems, as well as weapons for the air force and air defence. For example, the Radio-Electronic Technology group KRET showed off its new equipment for the PAK FA [T50] fifth generation fighter, as well as the IRBIS-E, the world's most powerful radar management system for the Su-35 fighter. In addition, as part of its airshow business programme, Rostec and its member companies concluded a number of cooperation agreements with Russian and international aircraft manufacturers. An agreement has been signed with South Africa's Denel group, French firm Turbomeca, and Airbus. What are the priority markets for the corporation? Almost one-third of our products is exported. Rostec has 50 overseas offices, which help to promote our products in more than 70 countries. Largely because of this, the Helicopters of Russia holding company, for example, already ranks first in the world for its sales of attack helicopters, and VSMPO AVISMA supplies over 30 per cent of the world’s titanium—including 40 per cent of Boeing’s demand, 60 per cent of that used by Airbus and 100 per cent of Embraer's supply. We are now focusing on increasing the share of civilian products in the domestic and foreign markets.

Dmitry Shugayev, deputy director general for international economic cooperation, Rostec

Besides MAKS, what other channels are being used to find new partners? Contracts are often made at the world’s largest airshow,s such as Le Bourget, Farnborough, Peruvian SITDEF, Dubai Airshow, HeliRussia and others. Rostec serves as a unified organiser of more than 20 exhibitions of Russian products abroad. Thus we find international partners to create joint ventures. This fosters the transfer of innovative technologies to Russia and expands the Russian presence in the export markets. What are the main spheres for cooperation with China, India and Latin America? We continue to develop partnerships with our colleagues in China. Atomic energy, civil rocket science, the export of helicopters and their after-sales service are now among the potential areas of cooperation. As for India, it is one of Russia's key markets for military and dual-use items. Rosoboronexport's portfolio of orders is worth more than $6 billion. We are negotiating contracts for the supply of a wide range of weapons for India’s air force, navy and army. For us, Latin American countries are a fast-growing and highly promising market in terms of aircraft exports. Rostec has offices in Argentina, Brazil, Chile, Colombia, Cuba, Mexico and Peru. Yekaterina Turysheva RBTH

Weird Science Latest Russian win in satirical science awards continues longstanding tradition

People can walk on water... on the moon For the sixth time in the 22-year history of the Ig Nobel Prize, a Russian takes home the honours IGOR ROZIN RBTH

AP/EASTNEWS

A team of scientists featuring Russian Yury Ivanenko have won the award in physics for their publication in the journal PLoS ONE. In it, the scientists proved that people would be able to run on the surface of water if the attempt were carried out on the moon. Russians have received the Ig Nobel Prize a total of five times before: 1. Corresponding Member of the Russian Academy of SciencesYury Struchkov received the Ig Nobel Prize in 1992 for his achievements in the field of literature. In the period between 1981 and 1990, he co-authored 948 scientific papers, which means that, on average, he published a new article about every four days. Almost all of his work was devoted to crystallography—the sci-

Master of ceremonies Marc Abrahams, left, introduces the winners.

The Ig Nobel Prize: science's ﬂip side The Ig Nobel Prize was introduced in 1991 by the American magazine Annals of Improbable Research, and is given for scientific achievements that are deemed trivial or amusing.

Since 1991, 10 Ig Nobel Prizes have been awarded annually in various categories—from classical Nobel physics and chemistry, to ornithology and astrophysics.

ence of crystals and their structure. Gossips claimed that there were not enough facilities in the Soviet Union in order to conduct research in the field of crystallography. Soviet scientists used the facilities of the Institute of the Academy of Sciences, and therefore, as a thank-you gesture, they added the head of the institute to the list of co-authors. 2. In 2000, the Ig Nobel Prize in physics was awarded to a native of the Soviet Union, Andre Geim, and an Englishman, Sir Michael Berry of Bristol University, who forced a frog to float in the air with a powerful electromagnet. According to Berry, the magnet pushes the frog out in the air because of the difference in the fields. A frog is not a magnet, of course. However, it magnetises the electromagnetic field. This is called “induced diamagnetism." Interestingly, in 2010, Andre Geim, who had already abandoned his citizenship of Russia, together with his associate Kon-

stantin Novoselov, won the Nobel Prize in Physics for obtaining a material called graphene. He thus became the first—and so far the only—holder of both the world's real and comic Nobel Prizes. 3. The year 2002 was marked by scandals related to distortions in the financial statements of large corporations. The organisers and the jury of the Ig Nobel Prize

Andre Geim has become the first — and so far the only — winner of both the world's real and comic Nobel Prizes could not ignore it and awarded officers, directors and auditors of about 30 companies a joint prize in economics. The wording of the award reads: "for application of the mathematical concept of imaginary numbers in business." One of the companies which received the award was the Russian gas giant Gazprom.

4. In 2012, Igor Petrov, who headed a group of Russian engineers from the SKN company, received the Peace Prize for developing a method for producing nanodiamonds using military explosives. "Ladies, if you want diamonds, come up to me after the ceremony: But you have to bring your own explosives with you," Petrov announced to the audience in his acceptance speech as he received the award. 5. In 2012, the Ig Nobel Prize in the field of exotic hydrodynamics was received by another Russian native, Ruslan Krechetnikov, who is a professor at the University of California. Together with his graduate student, Hans Mayer, Krechetnikov discovered the reason why coffee spills out of a cup while a person is walking. It may come as a surprise to readers, but it is the unevenness of a person's stride while walking and carrying a cup which is to blame, according to the results of the research.

RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_MONDAY_SEPTEMBER_30_2013

Culture

Art One of Ilya and Emilia Kabakov's ships of tolerance is to open in New York this month

Islamic cinema takes centre stage

Hoisting the sails of tolerance all over the world CURRICULM VITAE

ARTEM ZHITENEV/RIA NOVOSTI

The artist's project, which unites children of different ethnic and social backgrounds to create sails for a ship, has been recreated in Venice, Miami, Sharjah and other cities around the world.

CONTINUED FROM PAGE 1

YAN SHENKMAN RBTH

Before their 60-foot ship with coloured sails made of children's drawings was installed on Gorky Park’s Pioneer Pond, Moscow schoolchildren listened to lectures on tolerance for four months and worked on their paintings for the sail. Ahead of the opening of their ship of tolerance in New York on September 27, Emilia Kabakova told RBTH about the history of the ships: “We built the first ship in the Egyptian city of Siwa, located on the shores of a salt lake. They have never had ships there before, and we decided that the children should make the sails.” The ship was built by 17- and 18-year-old boys from Manchester, and the Kabakovs noticed that they quickly built a rapport with the local children, despite the cultural differences.

The 'Ship of Tolerance' on display in Moscow's Gorky Park.

AFP/EASTNEWS

Ilya Kabakov lives in the United States, but he was born in the Soviet Union and became known as one of the founders of the Moscow conceptual school. He started as a book illustrator and was an active member of dissident exhibitions. Kabakov's “Beetle” ($5.8 million, 2008) and “Luxury Suite” ($4.1 million, 2006) are two of the most expensive pieces of contemporary Russian art ever sold. His artwork is exhibited in Moscow’s Tretyakov Gallery, St. Petersburg’s State Hermitage Museum, New York's Museum of Modern Art, and in other prestigious international collections.

“Immediately, some common interests appeared. They began to play soccer together. Then they wrote on the sails: ‘We want to be friends,’‘Come to visit us,’‘Siwa is a lovely city’...” The Kabakovs’ next ship was launched inVenice – a location chosen due to tensions that have arisen in recent years in Italy as a result of high levels of immigration. “There are many immigrants in Italy and the issue of tolerance is crucial there,” says Kabakova. “Children at schools are always bullying each other; there is a lot of aggression, racism and many other problems. So we organized a six-month course on tolerance.” “People need knowledge about culture to be able to get along, to understand each other and to avoid wars. Culture is a way to learn

more about another person, and the easiest way to do this is to use visual images. Everything is based on two main things — knowledge and respect.” "The ship is a universal symbol. The ship is a way of transferring knowledge about other civilisations and different cultures," said Kabakova. As part of the Moscow project, 15 children flew to the city from Miami with pictures they had drawn for the ship. The children were inspired by the ship that was built three years ago in Miami. The Kabakovs are now preparing for next spring’s exhibition at the Grand Palais in Paris, where they will construct an installation they call a “Strange Town.” Exhibitions will also be held in Mexico, the UAE and Switzerland.

leh Village" by Golamreza (Bahram) Azimi of Iran — about a romantic relationship between two elderly residents of Masouleh, Iran, who are looked after by a recently arrived young couple. The event was not short of scandal. The chairman of the selection panel, Sergei Lavrentiev, who runs the Kazan edition of Business Online, told of his surprise that a film about the deportation of the Crimean Tatars in 1944 was removed from the main competition programme, since the picture in question ("Khaytarma" or "The Return"), by Crimean Tatar director Akhtem Seytablaev, was initially slated to open the festival. At the final press conference, the head of the selection panel suggested that the decision was taken following "a call from the Russian Ministry of Foreign Affairs." According to panel member Rustam Batrov, chairman of the Council of Ulems under the Spiritual Administration of Muslims of Tatarstan, such events affirm Kazan's status as the Muslim capital of Russia: "The importance of the festival is that it portrays Islam as a part of our culture, not just as a religion or act of worship relevant only to believers. The festival helps everyone — regardless of religious conviction — to see the beauty of Islam and become enriched by the values and ideals inherent in Islamic tradition. Usually, at the end of the festival, I request DVDs of all the films, so I can watch them in my own time. Such films cannot be found on TV or the big screen — it is special, 'underground' cinema."

Russia came away with only one award. The golden statuette for best cinematography was presented to Oleg Lukichev for his work in Maxim Panfilov's "Ivan, Son of Amir." However, besides the main awards, Russian pictures picked up some special prizes. The President of Tatarstan's Prize for Humanism in Cinema went to director Maxim Shvachko for the documentary film "The End Game," filmed on location in Tatarstan. Another special prize from Rossotrudnichestvo (the Federal Agency for the Commonwealth of Independent States, Compatriots Living Abroad and International Humanitarian Cooperation) was awarded for "Chippendale" by Kamilla Safina, who shot a curious one-reeler about how the owner of an antique shop in Tmutarakan

"The importance of the festival is that it portrays Islam as a part of our culture, not just as a religion." -Rustam Batrov goes in search of a rare antique chest-of-drawers. Among the foreign full-length documentaries, the main award was collected by German director Martin Gerner for "Generation Kunduz — The War Of The Others." The equivalent award in the short-film category was presented to Azerbaijani filmmaker Fariz Akhmetov for "Melting Island." Recognition for the best animated film was conferred on "Masou-

1. GO FOR A SWIM

The best place for a relaxing summer afternoon by the waterside is the Serebryany Bor woods. Here you can see rare flowers, ride a bike or have a swim in the beautifully clean water. In winter, you can go skiing and skating on the ice.

There are more than 100 parks and garden estates in and around Moscow which are open to the public. Here even the choosiest of visitors will find something to tickle their fancy. Russia and India Business Report recommends some of the best ways of spending time in the Russian capital's great green outdoors.

2. ENJOY A COMFORTABLE STROLL BY THE MOSKVA

4 2 5

6 7

Moscow’s most famous park is Gorky Park, in the very centre of the city, on the banks of the Moskva River. Visitors can enjoy free wi-fi throughout the park, chic cafes with waterside views, an open-air cinema – and the famous winter ice-rink.

3. SAVOUR FINE ARCHITECTURE

4. CATCH A CONCERT

5. HAVE FUN WITH THE KIDS

The Arkhangelskoye estate – located to the north-west of Moscow – was first laid out in the 1780s. The landscape here is adorned with palatial buildings and structures in the style of Roman villas or terraced French chateaux. Paths and lawns line the grounds, along with numerous antique marble statues.

Another of the citycentre parks, the Hermitage Garden, has pleasant outdoor restaurants, table tennis tables, and an array of concerts – which you can enjoy by buying a ticket.

The Kuzminki-Lublino Park is in the southeast of the city. A river runs through the estate, which has two manor houses, five museums, stables with a music pavilion, and 26 children’s play areas.

Serebryanny Bor

Gorky Park

Arkhangelskoye

Hermitage Garden

6-7. SOAK UP THE HISTORY Two parks in the south-east of Moscow are just a few metro stops apart – the Kolomenskoye MuseumPark, and the Tsaritsyno Open-Air Historical Park. Kolomenskoye was formerly a royal summer residence. In the 17th century, Tsar Alexei Mikhailovich built a unique wooden palace there. Today, it’s the only park in Russia to retain its original layout as an English park.

Kuzminki-Lublino

Kolomenskoye

8. GO FOR A PICNIC IN THE WOODS The Losiny Ostrov (Elk Island) Park is the largest of all of Moscow’s parks, covering 44 square miles, of which woodland makes up 80 per cent. It was once a favoured hunting ground for the Russian tsars. Visitors to the park will find picnic spots, marked walking trails, and sports facilities.

Tsaritsyno

Losiny Ostrov

en.travel2moscow.com/where/visit/parks/

RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_MONDAY_SEPTEMBER_30_2013

Opinion

WHAT CAN RUSSIA OFFER TO THE WEST? Richard Sakwa POLITICAL ANALYST

espite President Vladimir Putin’s attempts from the very first days of his leadership to “normalise” relations between Russia and the West, relations remain fundamentally abnormal. Putin’s definition of normality was straightforward: that Russia would no longer be treated as a special case, but as just another independent country. To this end, he quickly paid off the bulk of sovereign debt and ended various dependencies that had built up in the 1990s, for example on the IMF. At the same time, he accelerated the integration dynamics that had languished in theYeltsin years.This included intensified relations with the European Union and, after 9/11, the attempt to create a partnership of equals with the United States. However, it soon became clear that this“normalisation”strategy would not work. Russia was unable to become just another great power. The political demands placed on the country are high, in part because Russia itself accepted these demands as part of the process of becoming a nation state in 1991, and in part because of its

self-identification as a European state and a core member of the international community. The systemic and identity contradictions that remain unresolved in Russia mean that “abnormal” features will remain in Russia’s relations with the western world for the foreseeable future.The language of boycotts and threats by western powers and activists only exacerbate the contradictions of the Russian polity rather than help resolve them.

Both Barack Obama and Putin understand that there is no fundamental ideological divide. Russia’s acceptance into the transatlantic community was problematic from the very beginning, hence President Boris Yeltsin’s talk of a“cold peace”as early as December 1994. One of the features of this cold peace syndrome is the absurd language of resets and pauses. No normal countries would talk to each other in these terms, and it is humiliating for all parties to have degenerated to the point that they do so now. It is time for a more mature re-

SLASH OR SPEND: MOSCOW TAKES A FRESH APPROACH Pavel Vasiliadi FINANCIAL ANALYST

s part of the ongoing debate on international financial architecture, Russia, now an established host of G20 summits, has proposed opening discussions on a range of issues related to the management of public debts. One of the steps recommended was the revision of the guidelines for public debt management, which were originally developed by the World Bank and the IMF. Another focus was a strategy for working towards a gradual reduction in government stimulation.The G20 participants were presented with a medium-term programme aimed at a gradual movement toward stabilisation and improvement of state budget deficits and the volumes of public debts. According to Russian President Vladimir Putin, the G20 members, after some heated debate, agreed on the necessity of finding an optimal balance on the issue. As the situation in the eurozone has shown, the ambitious austerity programmes pursued by some states have failed to bring those countries out of recession. Yet equally, it is clear that taking a lax approach to reducing budget deficits could undermine confidence in the markets.

Therefore, individual strategies that will balance these two mutually exclusive interests are required. Meanwhile, Putin stressed that simply restoring stability to state finances is not enough to guarantee a return to high growth rates. At the G20 Summit, Russia put forward its St. Petersburg Action Plan, an initiative which aims to ensure continued growth and job creation. The plan is based on the fiscal policies and obligations of nations to implement structural reforms that will make it possible to make progress in labour market regulation and taxation, human capital development, infrastructure modernisation and regulation of the commodity markets. As part of the G20 Summit, Russia presented its fiscal policy, the

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lationship to be established on both sides. For the West, despite much talk about Russia’s relative marginality and insignificance, a strong relationship with Russia is essential for strategic, economic and simple diplomatic reasons. The tragedy of recent years is that the EU has not been able to develop a distinctive voice of its own as one of the fundamental representatives of the European nations and as a mediator in transforming the transatlantic community. While Europe does have a voice of its own, its failure to challenge the mistakes of the dominant power in the western hegemony over a whole set of issues, including the war in Iraq, has undermined its credibility as a normative power in its entirety. Of course, this allows Russia to rise to the occasion, and instead of reinforcing the marginality that its opponents wish to impose on the country, Russia can help resolve some of the impasses of the West’s own making. Supine subservience of the British type to American hegemony helps no one. It is the duty of a friend to point out the errors of one’s friends. Thus, Russia can reposition itself from a perceived troublemaker to a problem-solver.

basis of which were deficit and public debt parameters approved in the budget for 2013–2015. According to Russian Finance Minister Anton Siluanov, the St. Petersburg Action Plan includes measures for stimulating investment, which, by 2015, should provide a level of investment equal to 25 per cent of GDP. Russia's role as the largest energy supplier to the world market means it makes little sense to compare the parameters of Russian state financing with those of other countries — even with members of the BRICS bloc. Russia is able to maintain comfortable levels of public debt to GDP and a current account surplus in its balance of payments. It is too early to say how the implementation of austerity measures in Russia will pan out. The new budget rules came into force only this year, and the slowdown in the national economy is at least partly a result of the reduction in government spending, yet other factors have also been in play. Pavel Vasiliadi is Director of the Analytics and Risk Management Department at the UFS Investment Company.

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Both Barack Obama and Putin understand that there is no fundamental ideological divide between Russia and the West, hence talk of a new Cold War is misplaced. Yet tensions do exist that foster an atmosphere of cold peace. From Syria to Snowden, there is no end of issues on which Russia has its own views. Though a whistle-blower is naturally not to Pu-

tin’s taste, Russia was right on normative grounds to offer Snowden asylum, if only for a year. Equally, Russia’s analysis of the Syrian crisis was more accurate than that of the West from the beginning. The fundamental question is whether these are normal differences of view or whether they indicate an incompatibility of strategic interests. There is little

evidence to indicate that the latter is the case. Russia’s main influence today is as a moderating force in international politics - it can play broker in some of the conflicts and contradictions in western policy. Richard Sakwa is professor of Russian and European politics at the University of Kent.

EVOLVING A NEW PRAGMATISM TOWARDS POST-SOVIET SPACE Fyodor Lukyanov POLITICAL ANALYST

oscow’s policy with regard to its closest neighbours is becoming more and more pragmatic. Demonstrative trade sanctions against Ukraine and an unexpectedly warm meeting between the presidents of Russia and Azerbaijan in Baku suggest that the Kremlin is continuing to play hardball. As the Eastern Partnership Summit - at which Kiev and Yerevan are to sign agreements on closer institutional ties with the European Union - draws near, Russia is making it clear that the move would change Moscow’s attitude toward these countries. Although Russia has never officially taken an “either–or” attitude like the EU and is stressing that the two projects are mutually complementary, it is clear that it is once again a zero-sum game. The paradox is that the postSoviet space has dropped on the scale of priorities for the leading players. Economic activities with regard to the former Soviet Union countries peaked in the middle and second half of the 2000s. The situation has now changed. The days when the US sought to take the lead and to maintain a universal presence seem to have gone. The EU is not going to expand or invest in tying itself to the states east of its present borders.

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Russia is perhaps the most interesting case. Its declared priority is to strengthen the Customs Union and create a Eurasian Economic Union on its basis. This is the aim of its foreign and economic policies, and all the former Soviet Union countries are invited to join. Ukraine has been told how much it would lose if it signs an enlarged agreement on a free trade zone with the EU; Armenia has been warned that even its close ties

The value of integration is not taken for granted, but it is giving way to a calculation of what is and what is not of value. would not be immune if a document on association with the EU were signed. Moldova (due to initial an agreement with the EU) has also been reminded that it still has an opportunity to be of interest to Russia. The irony is that Moscow itself does not know its own mind yet. Unlike five years ago, there is less desire to integrate more than a few former Soviet republics. The value of integration is not taken for granted, but it is giving way to a calculation of what is and what is not of value, whether the game is worth the candle and whether the cost will exceed the benefits.

Even the issue of Ukraine, whose importance as a member of the Customs Union is in no doubt, is not so black-and-white. There is the risk that Kiev—which would play the role of a maverick in any association, haggling over every trifle — would simply paralyse the Union. Ensuring security in Central Asian countries, let alone dragging them into alliances with Russia, is also a matter of some doubt. As for the South Caucasus, Georgia and Azerbaijan are outside the debate, because neither Tbilisi nor Baku (each for their own reasons) wants to join the Russian projects. Russia is in a state of transition, this being applicable to all aspects of its policy. The post-Soviet era is over and nobody knows what the new era will be like—the path is being determined by trial and error. As regards neighbouring countries, Moscow has opted to bide its time. It would like things to be in a suspended, transitional state until it makes up its mind about what it wants. The internal problems of the neighbours and their potential patrons in the West (and East) complicate the task, because no one is prepared to face serious risks for the sake of Ukraine, Armenia, or Tajikistan. Fyodor Lukyanov is a political scientist and the editor-in-chief of Russia in Global Affairs journal.

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Feature

Travel The mountain villages of the North Caucasus have preserved their artisanal heritage for centuries

RECIPE

Arts and arms: on the trail of Dagestan's ancient handicrafts

Sweet millet kasha with pumpkin Jennifer Yeremeyeva JOUNALIST

Each village has its own specialisation: the family secrets of pottery, engraving, gilding, and carving are passed down from one generation to the next.

travel.rbth.ru

IVAN DEMENTIYEVSKY

The village of Kubachi is one of the most famous traditional centres for the production of silver jewellery, stone and wood carving in the Caucasus. Armourers have worked in the village since ancient times, forging chain mail, swords, and sabres of various shapes and sizes. Select pieces of weaponry were decorated with ornamental script, silver or gold. Legend has it that Alexander the Great's helmet was made by Kubachi craftsmen, as well as the collection of blank weapons given as a gift by Alexander III to Queen Victoria. In Soviet times, items made by Kubachi craftsmen were often presented to people of power as extravagant gifts. For example, the village museum features a vase which was given to Stalin. After his cult was dethroned it was miraculously returned to the village where it was made. Today’s realities have naturally left their mark on production. Chain mail is of course no longer

IVAN DEMINTIEVSKIY(3)

SPECIAL TO RBTH

Many of the traditional artefacts made in Kubachi are decorated with ornamental filigree in silver or gold. Moscow

produced, and if a sword is made it is not as a weapon. The village mostly produces dinner sets, equestrian harnesses, and women's jewellery. However, besides the pieces produced at the village's state factory, many individual craftsmen

work in the village. For this reason it is worth coming here to see how silver plates or a delicate women’s bracelet are produced from offcuts and scraps of silver and decorated with gilt and filigree enamel. Some local craftsmen are versatile enough to take on any work but they are few. It is more often the case that a craftsman will specialise in a specific skill. For example, silver needs to be smelted and sheets cast for further processing. Only a few people in the

village are able to do this kind of work and the other craftsmen will approach them. It is not only the craftsmen that lend the village of Kubachi its interest. Not far from the village is the historical monument of ‘KalaKoreysh’. In the Middle Ages, Kala-Koreysh was a political and cultural centre as well as the focal point for the spread of the Islamic faith in the North Caucasus. At that time it was a heavily defended fortress. Gradually its influence faded away

and today the place is reminiscent of a ghost town. It is said that climbing up here is considered to be a mini-Haj. Kala-Koreysh is situated around five or six kilometres from the village and a clearly visible path leads there. After a long slope offering views of the surrounding mountainsides, there is a short climb, and ten minutes later, beyond a number of ruined houses, lies what for many Muslims is a holy place. Right at the top is the warden's house, where visitors can rest for a few hours, and even spend a few nights. However, water is scarce and should be brought along. People come here with their families, with friends or just on their own, to be in communion with themselves, to enjoy the unspoilt scenery or just relax and gather strength for their onward journey around Dagestan.

Lifestyle Many young couples are prepared to spend colossal sums on tying the knot in style

Weddings à la Russe: marrying tradition with extravagance Everything must be upscale and elegant. Elegant means following traditions, while upscale demands the height of modern fashion. ANNA TROFIMOVA

REUTERS

RBTH

The traditional Russian wedding went like this: matchmaking, bride-assessment, hen party and stag night, the wedding journey, the dowry, the wedding ceremony, a ritual walk, and the nuptial feast. Very few Russians observe these traditions today. The elements that have survived are the wedding feast, the engagement traditions and the ceremony itself — though the latter two are less observed.

The traditional white bridal gown is still a must for many brides.

“Today, most couples expect that their wedding will be organised by a designer; they are interested in the colour theme and that the wedding reflects the history of their relationship,”says Alexandrina Remiz, a manager from the wedding agency pozhenimsya.ru. The demands of newlyweds continue to grow with each passing year, with an accompanying rise in the price of weddings and in the services of wedding agencies. Particularly costly are weddings that involve carrying out the registration in the countryside, or even abroad. The price of a wedding in a top restaurant can also be exorbitantly high. Remiz explains: “These days, agencies have to be able to set things up on any budget. I’ve known cases myself in which the young couple has done the whole thing in Moscow for just 100,000 rubles ($3,035), with 50 guests.

Usually, the couple decides what they want to spend. We’ve organised weddings where the couple was ready to spend up to 2–3 billion rubles ($60.7 million–$91 million). Of course, that price includes the very top photographers, cameramen and other staff.” Generally, weddings can take 2–4 months to organise. The most demanding couples begin organising the details of “the most important day of their lives” up to a year beforehand — booking the wedding date, reserving the restaurant, etc. “A wedding these days,” says Remiz, “is like a bet on the individuality of the couple. Just two or three years ago, couples were organising theme weddings in the style of Chicago gangsters of the 1920s, or 1980s disco nights, or modelled on Ancient Russian traditions. So tradition can be found converging with the present.”

My daughter Velvet was the fussiest of fussy eaters and she drew the line at cereal of any kind – hot or cold. Three housekeepers and a babushka despaired of her! The one exception she made each year was pumpkin porridge, or kasha, with millet, made from the meat of the jack o’lanterns we carved for Halloween. The idea and the recipe was given to me by a cheerful woman at Moscow's Leningradsky Market who kept back whole round pumpkins for us each October. The result was a sweet, creamy, and decorative triumph, which even Velvet relished. I started to buy pumpkin chunks to experiment with different versions of pumpkin and millet kasha. The recipe which follows has proved popular throughout the year – not just at Halloween!

LORI/LEGION-MEDIA

Ingredients • 1-1/2 cups roasted pumpkin, pureed or small cubes • 1 cup of millet • 2 cups of milk • 1/3 cup of honey or brown sugar • ¾ cup of curd • 1 pinch of salt • 1 tsp of cinnamon • 1 tsp of ground allspice • 1 cup of raisins or currants • 3 tbl of sweet butter, cut into small cubes • 2 tbl of demerara sugar Preparation 1. Preheat the oven to 325°F (160°C) 2. Place the millet in a colander and run it under cool water for a minute. Set aside to dry. 3. Place the dried millet in a heavybottomed Dutch oven over medium heat and toast the grains for a few minutes until they begin to brown. 4. Add the pumpkin and stir to combine. Add the milk and cook until just simmering. Add the honey, (or sugar) salt, and spices and stir until the honey is dissolved in the mixture. 5. Cover and reduce heat, and cook for 15 minutes until the millet has absorbed almost all of the liquid. 6. Stir in the curd and raisins. Dot the top of the kasha with butter and sprinkle the top with the demerara sugar. Cover the Dutch oven and place in the pre-heated oven for 15 – 20 minutes.

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