RBTH Thailand June 2014 issue by Russia Beyond

Thursday, June 5, 2014

www.rbth.com

History Fabergé is the most famous, but not the only great Russian jeweller.

VOSTOCK-PHOTO

ITAR-TASS

Politics Bilateral relations take a leap forward as Russia signs a big package of contracts with China.

P13

This supplement is sponsored by Rossiyskaya Gazeta, which takes sole responsibility for its contents and is wholly independent of The Nation.

Distributed with

ITAR-TASS

Russia’s new plans for the Arctic region

READ OUR SPECIAL SPREAD

PAGES 8-9

RUSSIA BEYOND THE HEADLINES

Politics

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

BRICS Due to global geopolitical changes, BRICS is becoming more attractive to other countries

IN BRIEF

More integration, or strategic expansion?

West curtailing missile cooperation

As the members of the BRICS group seek to further coordinate their policies, other countries are asking to join the club. What is the best way forward? VIKTOR KUZMIN

India’s Ambassador to Buenos Aires Amarenda Khatua announced in midMay that Argentina was interested in becoming part of BRICS and that India, Brazil and South Africa supported the initiative. Russian Deputy Foreign Minister Sergei Ryabkov said that expanding the group could be discussed at the next BRICS summit, scheduled for July 15 in the Brazilian city of Fortaleza. “We will take a constructive approach to any proposals, no matter where they come from,” Ryabkov said. BRICS is looking to expand its geopolitical presence as Russia and the West face off over the situation in Ukraine. Proposals for the group to create its own ratings agency

PHOTOSHOT/VOSTOCK-PHOTO

SPECIAL TO RBTH

BRICS is ready to discuss including new members.

and monetary fund have gained momentum in recent months. Experts say that the process to create such institutions was already moving forward and the moves are not directly related to sanctions. “The BRICS integration process is not a result of US and EU sanctions [over the Ukrainian crisis],”said Dmitry Ontoyev, an analyst

at the Moscow School of Management Skolkovo Institute for Research on Emerging Markets. “Rather, it is due to objective reality and current global economic and political trends. Set against the backdrop of the culmination of a series of economic and political cycles, the Ukrainian crisis is only an indicator, not a catalyst

for change in the global paradigm,” said Ontoyev. The joint statement issued by BRICS members at The Hague summit at the end of March this year was the first step in establishing a coherent foreign policy for the group. China, India, Brazil, and South Africa expressed their sympathy regarding the historical aspects of the situation in Crimea and underscored their opposition to the sanctions imposed on Russia. Ontoyev believes that, under these new conditions, BRICS will develop into one of the most important political and economic alliances thanks to one important factor – the full sovereignty of each participating member of the association. Maxim Pleshkov, a senior analyst at Russian rating agency RusRating, said that the commonalities between the BRICS countries made the alliance stronger. According to Pleshkov, BRICS member countries hold the same position on at least three fundamental issues. First, all BRICS members are striving to modernise their economies while simultaneously addressing social problems, whereas the West is concerned primarily with the concept of

sustainable development. Secondly, BRICS wants reform of the international monetary and financial system that developed in the years after World War II and resulted in the dominance of the US and its Western partners. BRICS want to gain a position that would be consistent with the increased role of their individual economies. Finally, BRICS member countries have consistently advocated the strengthening of international law and the primacy of the UN. These goals can be used as the foundation for developing a joint BRICS policy. “We should not forget that BRICS economies are mutually complementary. Member countries are spread out over all continents, and the total size of the BRICS market is more than 3 billion people,” said Pleshkov. In order to realise the huge potential of the association, Ontoyev believes it is necessary to create joint venture management institutes and discussion and decision-making bodies, and to coordinate policies and procedures, as is the practice in other, more structured and formalised international associations, such as the Shanghai Cooperation Organisation or the Eurasian Economic Commission.

Integration Russia, Belarus and Kazakhstan sign Eurasian Economic Union treaty

The decision to reject Moscow’s application for The International Conference on Missile Defence, (June 17-20 in Germany) signals that the West is suspending talks with Russia on this issue, the Russian Foreign Ministry said in late May. The move was explained as a problem with receiving guests.

‘Russia cannot be isolated’

PHOTOSHOT/VOSTOCK-PHOTO

The success of the recent St Petersburg International Economic Forum has proved that attempts to isolate Russia are futile, Russian Foreign Minister Sergei Lavrov said after the forum, despite claims from the U.S. that sanctions had successfully isolated Russia.

Putin’s public approval grows

‘Historic’ integration gives big boost to trade The economic union will come into effect on January 1, 2015 and cut down all trade and labour barriers between the members. RUSSIA TODAY RT.COM

On May 29, the presidents of Russia, Belarus and Kazakhstan signed an agreement creating the Eurasian Economic Union, a free-trade zone based on a pre-existing customs union.

HOT TOPIC UKRAINE: rbth.com/ukraine

“The signed agreement has landmark, historic significance,” Russian President Vladimir Putin said at the signing. Kazakh President Nursultan Nazarbayev added, ““A new geopolitical reality of the 21st century is born.” The troika of countries will cooperate in energy, industry, agriculture, and transport. In addition, citizens of the union members

will have the right to work freely throughout the member states without having to be issued any special work permits. Over the last three years, trade between the countries has increased by $23 billion, or nearly 50 per cent. At the end of 2013, it stood at $66.2 billion. “Together, Belarus and Kazakhstan are in third place in foreign trade with the Russian Federation,

NKO: I’LL POROSHE S, BUT A G R O F PAY TO COURT I’M GOING A E IM OVER CR /370 03 m o .c th rb

after the EU and China. We reached this level largely thanks to the integration process,” Putin said. The three member states make up only 2.5 per cent of the world’s population, but account for 15 per cent of total land. Additionally, the three countries account for 20 per cent of the world’s gas reserves and 15 per cent of oil reserves. “The geographical position permits us to create

transport, logistic routes of not only regional, but also global importance that permits attracting massive trade flows in Europe and Asia,”Putin said at the meeting of the Supreme Eurasian Economic Council in Astana, Kazakhstan. The possibility remains for other members of the Commonwealth Independent States to be brought into the free-trade zone later.

EST: THE PRESS DIG UKRAINE’S F O N R RETU RIES’; ‘MERCENA O’S BUDGET NK POROSHE 70 8 1 /3 rbth .co m

ITAR-TASS

The popularity of Russian President Vladimir Putin among Russians continues to grow, according to data released by the independent pollster Levada-Center. About 83 per cent of respondents said they approved of Putin’s policies as president.

NEXT WHY THE L BE IL W E MOV OR DECISIVE F UKRAINE /370 5 5 rbth .co m

RUSSIA BEYOND THE HEADLINES

Politics

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

Pivot to Asia Beijing’s ‘friendly neutrality’ over Ukraine makes western sanctions against Moscow less of a problem

Russia-China: a big push for partnership NIKOLAI GORSHKOV SPECIAL TO RBTH

A late May visit to Shanghai by a Russian delegation has proved a huge success, leading to several dozen economic agreements being signed. The headlines were dominated by a huge contract agreed by Beijing and Russian gas giant Gazprom, but the talks also yielded plans to create a competitor to Boeing and Airbus. Konstantin Simonov, director of the National Energy Security Fund (NESF), said China understood the political importance of the gas contract to Russia and was haggling hard. Russia wanted to prove to its western partners that it has alternative markets for gas; but China was equally interested in the contract because it needs gas for its eastern industrial regions that can’t get enough from

Central Asia. China is poised to become the largest gas consumer in the world. “Both countries’ interests have aligned in recent years”, says US-based global security think-tank Stratfor. “For China, the cost of importing liquefied natural gas is high, and its energy demands continue to grow. For Russia, the stability of demand from Europe – where Russia sends more than 80 per cent of its natural gas exports – has been a growing concern, especially as Russia and the West have sparred over Ukraine.” The Chinese national petrol and gas company CNPC denies that it tried to take Russia made its “pivot to Asia”, signing a big package of contracts with China in late May. advantage of Russia’s difficulties with the EU to bring down the price of Russian gas. It named its price long A Great Wall MoA joint venture Building transbefore the current talks of tors plant in cenbetween Russian port links across western sanctions against tral Russia to build and Chinese petrothe Russian-Chinese Russia. But the timing of 150,000 four-wheelchemical companies border to cut travel the deal has added to its drive vehicles a year. in Shanghai based on distances for goods significance. It may well be MAJOR This will be the first Russian technologies. and people by huna game-changer in the hisGreat Wall wholeIt is to be built at the dreds of miles. The tory of the Russian/Soviet RUSSIAprocess vehicle plant Shanghai Chemical first bridge is to be gas industry, traditionally CHINA DEALS overseas. Industry Park. built on Amur river. pivoted towards Europe. PHOTOSHOT/VOSTOCK-PHOTO

In late May, Moscow signed a 30-year $400-billion deal to supply gas to China along with a package of other contracts, including plans to develop an airliner.

More than a trillion cubic metres of Russian gas worth $400 billion will flow in the opposite direction over the next 30 years. On the news of the deal, Gazprom shares rose nearly 2 percent. Because of the underdeveloped pipeline infrastructure in Siberia there will be an extra cost of building supply lines. The two countries will need to invest about $75 billion in building this infrastructure. To some commentators, it’s a high price to pay for the diversification of Russia’s gas exports; to others it’s a perfect development opportunity for the Russian Far East. But it’s not all about gas. During President Putin’s visit to China the countries signed a “fantastic package” of contracts. Many of those are about joint manufacturing of highly finished products, a first in Sino-Russian partnership. To finance the projects, the countries have agreed to make more use of their national currencies rather than the dollar.

Sanctions Credit-card systems risk losing Russian market if they don’t meet new central bank regulations

ALEXEY SERGUEYEV RBTH

According to Morgan Stanley, MasterCard will have to place some US$1 billion and Visa, $1.9 billion. “The payment systems will also have to build processing centres in Russia and pay fines of up to 10 per cent of

HOT TOPIC CHINA: rbth.com/China

the funds held by the Central Bank in the event of a unilateral denial of services,” the bank’s report said. These measures came as the Russian authorities’ reaction to the decision by Visa and MasterCard to stop processing transactions on the cards issued by the Russian banks that featured on the list of US sanctions against businessmen, who – in the opinion of the White House administration – belong to President

Vladimir Putin’s inner circle. In particular, the sanctions affected the bank Rossiya owned by media tycoon Yury Kovalchuk and SMP Bank controlled by businessman Arkady Rotenberg. Without any advance warning, MasterCard and Visa stopped servicing cards issued by these two banks. Under the new law, should a similar situation rise again, the payment systems will have to pay hefty fines: US$100 million for Master-

ES PUTIN GO A IN H C TO /3 6973 rrbth .co m

DPA/VOSTOCK-PHOTO

Under new rules, international payment systems have to place a security deposit with the Russian Central Bank.

MasterCard and Visa are now the two major payment systems on the Russian market.

Card and $190 million, for Visa. The new rules were adopted against the backdrop of political pressure on the companies. For the international payment systems, an alternative solution would

INA: RUSSIA-CH OR HF A BIG PUS IP H PARTNERS 69 4 5 /3 rrbth .co m

be to spin off their Russian business into separate entities registered in Russia. Thus the companies will be exempt from obeying the US authorities’ stipulations regarding sanctions. Along with introducing

new rules for the international payment systems, Russia is planning to create a payment system of its own. In early May 2014, Putin signed amendments to the federal law on the national payment system, which envisage the creation of a national system of payment cards. One of the options is to base it on technologies developed by Russia’s biggest retail bank, Sberbank. Although, as head of the VTB24 bank Mikhail Zadornov has pointed out,“the creation of a full-fledged system will require hundreds of millions, if not billions, of dollars”.

-26T2_ OL_MIL_MI ROSTVERT NAUMENKO

MasterCard and Visa will pay for the right to work in Russia

INA HEAVY RUSSIA-CH CONCEPT MAY R E T P O C HELI ND BY YEARE BE READY LICOPTERS E H RUSSIAN /3 6 8 4 2 rbth .co m

RUSSIA BEYOND THE HEADLINES

Business

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

Trend Asean may be a new focus of Russia due to West-imposed sanctions

REUTERS

The opportunities outweigh the challenges for Russian-Asean cooperation in all spheres.

Russia-Asean ties: Many opportunities and challenges While China and India are the centre-pieces of Russia’s engagement with Asia, Asean is also likely to be a major partner for Moscow in the continent. AJAY KAMALAKARAN SPECIAL TO RBTH

With a combined nominal gross domestic product (GDP) of over $2.3 trillion, Asean offers Russia a strong, dynamic and reliable trading partner. Bilateral trade between Moscow and the Southeast Asian grouping has been growing since Russia was made a full dialogue partner of Asean in 1996, and was estimated at around $15 billion in 2013. Traditionally, Vietnam has been Russia’s closest ally in Asean, with the latter supporting Hanoi diplomatically and economically over the last five decades. Moscow will look to leverage its partnership with its old ally to gain a stronger foothold in Southeast Asia. The Customs

Union of Russia, Belarus and Kazakhstan, which will become the Eurasian Economic Union in January 1, 2015, is negotiating a free trade agreement (FTA) with Vietnam at the moment. FTA negotiations withVietnam are set to close by September 2014, and sources say Kazakhstan is the hardest negotiator in the ongoing talks. A deal with Hanoi could form the basis of a wider agreement with Asean, although experts are sceptical about the prospects of an FTA between the Eurasian Union and Asean in the near future. With its transparent business practices, ease of doing business in and a fairly attractive tax regime, an increasing number of Russian businessmen are looking at Singapore as a gateway to the Asean region. In a bid to boost trade and financial integration, the countries signed a double-taxation avoidance treaty in 2010.

Over 300 Russian companies have set up shop in Singapore, and the Russian community on the island is believed to number around 5,000. Russia’s wealth in advanced science and technology has caught the attention of Singapore’s authorities, who are always looking at ways to give the

Russia’s wealth in advanced science and technology has caught the attention of Singapore. city-state a technological edge. The National University of Singapore (NUS) has an Eastern Europe Research Scientists and Students Exchange Program in which Russian scientists are encouraged to take part, and the NUS Mathematical Sciences Institute also has an exchange programme with Moscow

For each grumpy russian waiter,

RBTH BTH ffor iPad

For each bottle of vodka,

For each of you,

People The lure of Thailand

State University. Russia is a major defence supplier to countries in the region, such as Vietnam, Malaysia and Indonesia. Although defence ties between Moscow and Jakarta cooled from their peak during the days of Suharto, Indonesia has gone back to buying Russian arms and ammunition. The country has a fleet of Sukhoi Su-27 and Su-30 fighters, along with Mi-35 and Mi-17 helicopters, BMP-3F infantry fighting vehicles, BTR-80A armoured personnel carriers, and AK-102 assault rifles. The Royal Malaysian Air Force has 18 Russian Su30MKM flankers, which were bought under a contract signed in 2003, to go along with a wide array of Russian arsenal including infantry equipment, air and naval defence systems. Many members of Asean have maritime territorial disputes with China and may be looking at Russia in the future to play the role of an honest broker. This definitely leaves Russia in a tight spot, considering the fact that political, economic and defence cooperation between Moscow and Beijing are at an all-time high. Recently, Russia and China signed a $400-billion gas-supply deal where the former will supply 38 billion cubic metres of gas a year for the next 30 years. The mammoth contract essentially blunted attempted Western sanctions on Moscow, but also puts the Russian foreign policymakers in a tight spot when it comes to China’s territorial disputes. It’s not just long-term allies like Vietnam that might look to Russia to censure China over its claims to islands in disputed waters. Several countries with islets on the South China Sea would also be counting on Moscow to play a balancing role in their disputes with Beijing. Russia will definitely be walking a tightrope as it looks to project its power in much of the developing world.

A home away from home As the last monsoon showers of the season leave Phuket behind in late-October, a large number of Russians descend on the island. AJAY KAMALAKARAN SPECIAL TO RBTH

Viktor Borisov, a former academician in the Russian f a r- e a s t e r n c i t y o f Khabarovsk, has a second home in Phuket, a place where he spends more than six months every year. He is part of a community of Russians on the island that is estimated to be around 30,000. An entire industry has developed to service the Russian community on the island from day-care centres to restaurants to a Russian-language newspaper. “Many people have enough cash flow from other sources from Russia or overseas to invest in the tourism business, including buying hotels, boats and restaurants,” says Alexander Dashevsky, a businessman from Sakhalin Island. The 44-year old, who is a co-owner of a construction company in YuzhnoSakhalinsk, tried his hands at operating a full-time business in Phuket. “We bought a glass-bottomed speed boat and hydrofoil and came here in October 2011,”Dashevsky said.“We were trying hard to get all the proper documents for business, but we got our tourist licence only at the end of January 2014.”After t h e y i nve s t e d n e a r ly $400,000, Dashevsky said his partner had a change of heart and wanted to exit the firm. Now Dashevsky is looking at importing salmon from the Russian Far East and exporting fruits and cosmetics from Thailand to Russia. Other Russians complain about the immigration laws and the red tape for foreig-

ners to start businesses on the island.“I have been waiting years to get licences to export flowers to Russia,” but it is a painful procedure, much like in Russia, where palms need greasing,” Borisov said. Thunjira Wattaporn, a Thai diplomat who is originally from Phuket and served in Russia, says the authorities need to make the business climate friendlier to help those servicing Russian tourists. “At this time, with our political crisis, this is not on a list of priorities,” she says, but adds that many people servicing Russian tourists are freelancers and are not paying Thai taxes despite what would be considered employment in the country. “These young people should be educated on our rules here,” she adds. The difference in Russian and Thai etiquette has often led to misunderstandings between locals and Russian expats. Wattaporn believes the cause of the problems is the language barrier. Dashevsky says that more Russian people need to adjust to Thai culture.“Some of the Russians are very rude to other people, because they live the same way in Russia and they cannot understand cultural differences. And then when I speak with Thai people they are really amazed why I can speak English and smile.” He says the best part of living on the island is the Thai culture, the people and their smile. “Phuket is a geographical crossroad, making it very cosmopolitan,” Dashevsky says. “I want to give my son time and freedom to live in a different society other than Russia, He has a Thai baby-sitter and he can hear Thai, English and Russian and he is starting to speak all the languages.”

there is a smiling babushka serving pelmeni

there is a glass of kvas

there is a Russia of your choice oice ice ic

RUSSIA BEYOND THE HEADLINES

Business

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

Taxes Russia sets a unprecedented low value-added-tax rate to encourage development

IN BRIEF

An offshore haven in Crimea

China to invest in Siberia

The Russian government has established a record low rate for value-added tax (VAT) in Crimea, at the level of offshore havens like the island of Jersey.

Moscow woos big tax-payers In a situation where business must return from offshore, Russian regions are trying to attract big tax-payers. In particular, Moscow has announced a lowering of the regional taxes on profit for oil companies from 18 per cent to 13.5 per cent. However, this is not for all profits, but only for growth; that is to say, the 13.5 per cent taxes are only paid on the difference between this year’s profits and the previous year’s, while the remainder of the revenues will be subject to the standard 18 per cent tax. Hence, market players do not consider Moscow’s offer exceedingly generous.

ALEXEY LOSSAN

SERGEI SAVOSTIANOV / RG

RBTH

Moscow is hoping to use Crimea as a tax have to attract foreign investors as well as encourage Russian businessmen to bring money back from overseas. In early May 2014, the Crimea State Council set new rates on value-added taxes: 4 per cent for regular wares and 2 per cent for socially important ones including foodstuffs, children’s care items, and medicines. For the purposes of comparison, the NDS (VAT) is an even 18 per cent throughout Russia. Additionally, the local government has forgiven taxpayers of all debts. The lowering of the NDS to 2-4 per cent is unprecedented for Russia. Such low taxes only occur in offshore zones. For example, Jersey, an island in the English Channel that is a possession of the British queen though it is not part of Great Britain, has a similar NDS rate of 3 per cent. According to Mikhail Kuzmin, analyst at a leading Russian consulting company Investcafe, such a decision seems quite logical: it is necessary in order to attract additional investments to the region. “The Russian authorities will try to create maximum relief for the introduction of business onto the territory of Crimea. The region is in need of restoration and new investments for development,”says the expert. The tax is set through the beginning of 2015, but may be extended in the future. According to the head of the department of legal consulting at Finexpertiza, Victor Demidov,

PHOTOSHOT/VOSTOCK-PHOTO

The benefits of the lower tax rate are still to come, but the move is unprecedented.

“If this measure results in positive results and stimulates investment activity, then the given NDS rates for Crimea will be retained after the end of the transition period.” It is interesting that the NDS does not fall into the sphere of responsibility of the regional authorities. However, in the case of Crimea, an exception has been made: federal legislation will start to apply to the island only in 2015. “This tax zone will be interesting, first of all, for the enterprises operating in the Crimea, as well as for Russian and foreign investors – provided the tensions surrounding Ukraine are lowered,” says expert Vasiliy Ukharsky from the analytical centre UFS IC. In his opinion, the decision to reduce the NDS may be considered a step in this direction. Other countries actively practice the lowering of taxes in certain regions. For instance, income tax was eliminated in the

American state of Oregon, which helped transform this region of the United States into an attractive destination for shopping, ecommerce, and the development of new designs by major clothing brands. The Russian authorities have somewhat similar plans for

able tax zones in Crimea is happening against the backdrop of Russian companies’ search for new places for jurisdiction. Firstly, the banking crisis in Cyprus has actively contributed to this process. According to data from the Central Bank of Russia, Cy-

The lowering of the value-added tax to 2-4 per cent is unprecedented for Russia.

The government plans to create a special economic zone on the peninsula.

Crimea. At the moment, the Ministry of Economic Development has a plan to create a special economic zone on the peninsula. If a company invests 150 million rubles ($4.2 million) in the region’s economy over a three-year period, it will be relieved of all taxes except for the 10-per-cent tax on profits. However, the Russian government is still finalising these plans. The creation of favour-

prus was ranked first among all the countries to which money was transferred from Russia. In Moody’s estimation, the volume of deposits from Russian companies was approximately $19 billion. In total, Moody’s experts estimated that Russian banks held up to $53 billion in Cypriot banks. Of this money, $10-12 billion was irretrievably lost because of the crisis, and just as

much is stuck in the local banking system. As a result, Russian companies for the first time have to face the danger of losing money tucked away in a so-called “safe zone”. Secondly, the authorities have announced a largescale programme for the “de-offshorisation” of the economy and the return of companies from overseas to Russia. In his Address to the Federal Assembly in December 2013, President Vladimir Putin declared that it had become necessary to fight against “offshoreisation.”Soon after, the Ministry of Finance developed a draft law for controlled foreign companies. The law says all Russians who directly or indirectly own even 1 per cent of a foreign company are required to inform the government of this. If they own 10 per cent of a company registered offshore, they must inform the tax authorities and pay taxes on the retained earnings.

DEFINE YOUR ‘RUSSIAN HOMELAND’ M a n y p e o p l e w i s h t h e y ’d b e e n b o r n i n a d i f f e r e n t c o u n t r y. W h a t i f i t w a s R u s s i a ? C h e c k o u t o u r Q U I Z : I f yo u we re R u ss i a n , w h e re wo u l d yo u l i ve? > > t rave l . r b t h .co m / 1 4 2 7

Chinese banks may invest up to $5 billion in the next five years in electricity distribution networks in Siberia, a source close to negotiations said in late May. A Russian power company, Russian Grids, has signed a preliminary deal with China’s state grid company, under which annual investments in MRSK Sibiri could rise from $500 million to $1 billion, the source said.

Taking on EU Russia is considering suing the European Union through the World Trade Organisation (WTO) for giving Ukraine an edge in the EU market without a free-trade agreement, Russian Deputy Minister of Economic Development Alexei Likhachev said. Likhachev said the preferences “contradicted the basic principles of the preferential treatment regime, and the WTO basic principle of non-discrimination”.

Tourism plan for Crimea The Russian government has launched a large-scale programme aimed at promoting tourism to Crimea. Historically, Crimea was one of the main holiday destinations for Soviet people. It was here that an extensive network of holiday homes and resorts was built. In the late 1980s, Crimea was visited by up to 8 million people a year.

RUSSIA BEYOND THE HEADLINES

Society

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

State Public-service staff get a range of benefits, which make being a bureaucrat attractive High-ranking Russians officials get access to state dachas (country houses).

Despite the fact that bureaucrats in Russia are not as well paid as their counterparts in the West, they get their benefits.

Vladimir Putin’s tax declaration

ALEXEY ANDREYEV RBTH

PHOTOSHOT/VOSTOCK-PHOTO

According to official figures, at the end of 2013, Russian President Vladimir Putin’s salary was a little bit lower than that of US President Barack Obama. Putin earned 3.672 million rubles (US$100,000) a year. Prime Minister Dmitry Medvedev took in 4.259 million rubles ($118,000). In comparison, Obama’s income for the same period was $481,000 and VicePresident Joe Biden’s was $407,000. European leaders also earned more than Putin and Medvedev. German Chancellor Angela Merkel’s yearly income was 280,000 euros and France’s President Francois Hollande’s 180,000 euros. Public servants in Russia on the whole earn significantly less than their colleagues in other countries; however, they receive material benefits and privileges, ranging from housing, education and health perks, to places to take holidays. High-ranking officials can use government vehicles, dachas (country houses) and a special postal serv i c e . L o w e r- r a n k i n g officials also receive benefits. In line with the law on the Civil Service, officials

have the right to subsidised housing or to the privatisation of a state-owned apartment (although they can only claim this once in their career). This is how the mayor of Moscow, Sergei Sobyanin, became the owner of a 308-square-metre apartment in the centre of Moscow. Free education is also considered an important benefit: Russian bureaucrats are entitled to take a second degree at a Russian institution without paying any fees and while earning their regular salary. They are entitled to take study leave or to study by correspondence, while continuing to do their job. As well, civil servants can use specialised health clinics and resorts.

BACKGROUND

Corruption in Russia Since medieval times, corruption in Russia has been rooted in the essence of the governing system. The third presidential term of Vladimir Putin has been marked by an unprecedented war on corrupt officials in the central governing apparatus and in the regions. The visible advance in that direction began during Putin’s second term, in 2006, when Russia ratified the UN Convention against Corruption and was thus internationally obliged to employ effective measures. Read more at: http://rbth.com/28099

Perks make up for lower pay of state employees

Putin’s 2013 tax declaration was that of a single person. His divorce from Lyudmila Putina was made official last year. Putina’s contribution to the family income accounted for 121.374 roubles (approximately $3.406) in 2012. According to this year’s declaration, Putin still owns two apartments (77 and 153.7 square metres), a garage and a garage unit. As for cars, Putin still owns two rare Volga brands (GAZ M21 and GAZ M21, pictured), a NIVA car and a Skiff (Scythian) automobile trailer.

With a recession in the private sector, the public service is becoming a more attractive employment option in Russia. According to the Independent Institute for Social Policy data, the portion of the population engaged in public service as part of the middle class continues to grow. In 2013, public sector employees formed 20 per cent of the Russian middle class, which is one-third more than in 2007. After the collapse of the Soviet Union, the number of government officials in Russia grew significantly, about three times, said Aleksandr Dorofeev, general director of the consulting company Arkaim. To precisely compare the number of public servants in Soviet and post-Soviet

times is difficult because the political structures are so different. Today, however, it is possible to single out three levels of officials: civil servants in federal executive agencies, employees of the subjects of the Russian Federation, and municipal employees, according to Ruslan Korchagin, director of the Public Management Scientific Research Centre at the International Institute of Public Administration and Management of RANEPA. In recent years, there are an average of 4.5 civil servants for every 1000 people in Russia, while in the US there are 6.5. According to Andrei Klimenko’s data, Russia does not have enough bureaucrats for its population. According to OSCE data, the total number of employees of the central government in Russia is over 600,000. In comparison, there are 420,000 public servants in Great Britain, 260,000 in Canada, 620,000 in Portugal, 1.8 million in Turkey, and 2 million in the US. According to the Russian State Statistics Service, if all federal, regional, and municipal employees are included, then the total number of executive branch employees in Russia is about 1.3 million. Whatever the exact number, according to Maksim Klyagin, analyst for the management company Finam Management, considering Russia’s population, the overall number of government officials in Russia is at least two times less than the comparable numbers in most developed countries. Attracting skilled staff to Russia’s public service would likely require a policy that monetised the existing benefits.“We have repeatedly proposed monetising the greater part of the benefits with the goal of increasing the effectiveness of budgetary expenditures,” said Andrei Klimenko, director of the Institute of Public Administration and Municipal Management at the National Research University — Higher School of Economics. According to Klimenko, for the Russian public service to attract the country’s best young professionals, pay rates will need to be raised to match private-sector levels.

IN BRIEF Disabled life The success of the Russian paralympic team in the recent Winter Paralympic Games and the state-ofthe-art facilities built for the Games in Sochi could give the impression that today’s Russia is doing a lot to integrate disabled people into society. Appearances, however, can be deceiving. Read more on a nationwide study about disabled life in Russia at: http://rbth.com/36725

Russians friendly: poll

PHOTOSHOT/VOSTOCK-PHOTO

About 68 per cent of Ukrainians consider Russians a friendly people, while 22.8 per cent said they do not, according to the findings of a poll conducted by the Razumkov Center. About 62 per cent of respondents see Russians as a fraternal nation. The poll was conducted among 2,012 respondents at least 18 years of age accross Ukraine in April.

Moscow for migrants

PHOTOSHOT/VOSTOCK-PHOTO

Muscovites now have the opportunity to study the languages spoken in the home countries of the majority of Russia’s immigrants, thanks to the opening of a special school at Muzeon Park that teaches Tajik, Uzbek, Kazakh, and Moldovan. A correspondent from Gazeta.ru found out what motivates Muscovites to learn these languages. Read more at: http://rbth.com/37043

RUSSIA BEYOND THE HEADLINES

Society

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

Jobs Career preferences have changed over the past 15 years

The professions Russians today consider the best

C O N V E R T I N G M O N O LO G U E S I N TO D I A LO G U E S

Russian parents hope their children become doctors or lawyers, not actors or politicians, according to a recent survey.

Turning the brain drain into brain gain?

Russia Direct is a forum for experts and senior decision-makers from Russia and abroad to discuss, debate and understand the issues in geopolitical relations from a sophisticated vantage point.

russia-direct.org

MAY’14 QUARTERLY REPORT RD’s second quarterly of 2014 examines global workforce mobility and the increasing competition among countries for the best and brightest. After the fall of the Soviet Union, Russia became a net exporter of brainpower. Today, however, Russia has significant advantages that could help the country become a magnet for professionals from all over the world. This memo explores 10 strategies Russia might use to attract this international talent.

ANASTASIYA MALTSEVA

Researchers at the Higher School of Economics in Moscow have released a new study revealing the aspirations of Russian parents for their children. According to the study, Russians hope that their children will become lawyers (24 per cent); doctors (21 per cent); economists or accountants (19 per cent); entrepreneurs, military servicepersons, programmers or systems administrators (14 per cent); engineers (13 per cent); architects (10 per cent); or translators (9 per cent). Very few (3 per cent) of those surveyed want to see their children in the creative professions as performers, writers, and artists. Slightly more (6 and 7 per cent) want to see them become politicians, sportsmen, journalists, and skilled workers. As Konstantin Fursov, a researcher at the Higher School of Economics (HSE) and the head of the research project“Monitoring the innovative behavior of the population” explained, lawyers and economists are associated with stable incomes and greater career opportunities. And being a doctor has always been considered prestigious work although it has only recently gained popularity. With the development of private medicine and voluntary health insurance, doctors’ incomes have started to increase. According to the study, a quarter of young men take the desires of their parents into consideration when it comes to selecting a profession; one in five rely on information online to make decisions about the future. “Even though most students choose a profession at the direction of their parents, this does not mean that their opinion about

PHOTOSHOT/VOSTOCK-PHOTO

SPECIAL FOR RBTH

The Arctic: a New Geopolitical Pivot? DECEMBER’13 MONTHLY MEMO

Twenty-one per cent of Russian parents surveyed hope their children become doctors.

themselves and the future coincide,” says Irina Blinnikova, psychology candidate and employee of the Psychology of Labor Laboratory at Moscow State University.“Often they just agree with their parents because of their age. But another tendency is gaining traction in Russia now; parents are refraining from influencing their children and are telling them they should study whatever makes them happy.” The online job site Superjob.ru analysed the preferences of upper and middle-class young men and discovered that they choose a profession based on two key factors: income and the possibility of quickly and easily building a career. The prestige of the profession, social status, self-realisation, and the opportunity to help others is important for only one in 10 graduates. According to the data from Superjob.ru, after completing their higher education, approximately 38 per cent of economics graduates find employment in their field of study, while the same is true of 52 per cent of law graduates and 73 per cent of graduates from the healthcare field. According to Blinnikova,

in the 1990s, Russians preferred to study the humanities. “In the universities, psychology, sociology, and foreign language departments started to be opened en masse,” says the labour expert. “In Soviet times, it was practically impossible to train for these specialties. Humanitarian departments were extremely few in number and only a few entered them. The rest received engineering and technical specialties regardless of their own wishes. In addition, there were not generally such professions as psychologist.” Recent years have seen the opposite development, continues Blinnikova.“The demand for humanities professions is gradually decreasing. In the first place, this is tied to the oversaturation of the labour market. Employers today need people with a technical profile. Students are slowly beginning to answer to the demands of the labour market. In Soviet times, engineers were treated as people with high status. Slowly but surely, they are again being so treated among Russians.” Professor Evgeny Kozhokin, rector of the Academy of Labor and Social Relations, says that over the past decade, deep social strati-

fication has taken place in the country. According to Kozhokin, graduates in Soviet times were freer emotionally in the choice of a profession than students today because they operated based on their interests and not as much on how much money they will earn in the future. “Students have made the transition to market pragmatism. Money has come to play a key role in the choice of a profession. They want to work at a stable job in the future and that is why many of them dream of making a career as an official,”says the professor. According to Kozhokin, the number of students entering engineering is low. “They do not see industrial expansion in the country or chances for the development of this sector of the economy, so they are not confident that they will find a good position after graduating from university.” Denis Kaminsky, a labour market expert, says that the majority of young specialists fail to think adequately about their future work and career, and therefore have a very vague idea about the labour market. Kaminsky mentions that everyone wants to work at Gazprom or Apple.

This Monthly Memo analyzes the role of the Arctic coastal states and other states, including China, in formulating the agenda for the region.

ACCESS ALL RUSSIA DIRECT REPORTS WITH ONE CLICK RUSSIA-DIRECT.ORG/ARCHIVE Student Essay Contest

BECOME A GUEST CONTRIBUTOR TO RUSSIA DIRECT FOR THREE MONTHS

Tell us: What does the global balance of power look like after Ukraine? Submit by June 9, 2014 Find out how to enter >> russia-direct.org/essaycontest2

RUSSIA BEYOND THE HEADLINES

Special

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

RUSSIAN ARCTIC A BIG PART OF RUSSIA LIES IN THE NORTHERN PART OF EURASIA, WHICH IS STILL UNDERDEVELOPPED

After the economic slowdown in 90s, Russia is back to the Arctics and plans to develop it into a wealthy and clean region. VADIM YERSHOV SPECIAL TO RBTH

Amidst the continuing developments in Ukraine, it is not at all surprising that news of an important expedition by the Arctic Research and Design Center for Continental Shelf Development has got lost in the shuffle. Details on the exhibition may be worth dozens of news reports from the “Ukrainian front”,though and not least because the Arctic Research Center running the expedition was founded by the Russian and US oil giants Rosneft and ExxonMobil. The fact that the expedition is going ahead shows not only that the two companies are maintaining business contacts, but also that they intend to develop cooperation in a strategically important area, the Arctic.

According to US Geological Survey estimates, the Arctic houses some 13 per cent of the world’s undiscovered oil reserves and up to 30 per cent of undiscovered gas reserves. More than half of the Arctic oil and gas reserves are located in the Russian segment of the

The Northern Sea Route may well turn out to be a more significant Arctic asset. region. In terms of gas alone, 95 per cent of Arctic reserves belong to Russia. Russia’s Arctic riches are too tasty a slice of the pie to give up their development. It was no coincidence that Rosneft’s cooperation with another oil and gas giant, BP, also began with a discussion of joint offshore projects. In 2010, the two companies were even planning to have a share swap. In addition, Rosneft

RUSSIAN ARCTIC IN PICTURES rbth.com/multimedia/pictures

and BP intended to set up an Arctic technology centre in Russia, which together with leading Russian and international research institutes, design bureaus and universities was supposed to develop and implement technologies and engineering practices for the safe extraction of hydrocarbon resources from the Arctic shelf. The fact that in the end Rosneft set up a similar centre together with ExxonMobil rather than BP is largely“thanks to”the Russian billionaire shareholders in TNK-BP, who four years ago in effect scuttled a promising deal for their British partners. Rosneft and BP gave up plans for a strategic alliance, and the part of the Russian state company’s partner in the Arctic went to ExxonMobil. Many experts compare the development of the continental shelf to space exploration, the development of nanotechnologies and

NATALIA MIKHAYLENKO

WEALTH IN THE ICE: PLANS TO TAP ARCTIC

Approximate amount of natural resources in Arctics by country.

electronics. The development of Arctic reserves would require complex technical solutions: from ships to oil rigs to geophysical, navigation and other equipment. US and European oil and gas companies have the relevant experience and technologies. That is why cooperation with them is clearly advantageous for Russia, too, as it helps the country“capitalise”on its Arctic assets and

do so faster and more safely. The Northern Sea Route may well turn out to be a more significant Arctic asset for Russia than the continental shelf reserves. This transport corridor, together with the Northwest Passage (located in Canada’s Arctic zone), make it possible to considerably speed up and simplify trade between Europe and Asia. For instance, the distance

between Rotterdam and Tokyo via the Suez Canal is 21,100 kilometres. The Northwest Passage reduces it to 15,900km, and the Northern Sea Route to 14,100km. In experts’ estimates, the use of the Northern Sea Route cuts cargo delivery times by 40 per cent as compared with traditional routes. This leads to savings on fuel, payroll and freight costs. In addition, there are no waiting

1300 kilom eters through Ru ssia by dogsled

Magical wo rld of Arctic nat ure in danger

RBTH.COM /35175

RUSSIA BEYOND THE HEADLINES

Special

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

EXPERT COMMENT

Strategy Arctic forces are built up

No alternative to Russia Focus on security developing the Arctic to protect national Aleksandr Pilyasov PROFESSOR

PHOTOSHOT/VOSTOCK-PHOTO

The Northern Sea Route may be freed from ice in future.

lists or restrictions on the size of ships that operators using the Suez Canal have to deal with. The role of the Northern Sea Route is also expected to rise considerably due to a growing use of liquefied petroleum gas (LPG). Thanks to LPG, producers can sell gas from any field irrespective of whether there is a pipeline in place or not and as a result, consumers can protect themselves against the risks associated with political instability in transit countries. A case in point is the Yamal LNG project, which is being implemented by the Russian company Novatek jointly with France’s Total and China’s CNPC. Naturally, the gas from Yamal will be delivered to buyers via the Northern Sea Route. It cannot be ruled out that in the future, Yamal LNG capacities may be used to liquefy gas produced on the Arctic continental shelf. Speaking of the advantages offered by the Northern Sea Route, many experts point out that global warming and melting of the ice could open the Arctic route for commercial shipping year-round (including for large tankers that are unable to use canals) as early as by the start of the 2020s.

Indeed, Arctic ice cover has been shrinking by 5 per cent every 10 years, while its thickness has halved over the past 50 years. However, even if one were to disregard the negative environmental consequences of these processes and be guided by business logic alone, these changes cannot be described as absolutely positive. After all, a warmer climate would push energy consumption down and would therefore affect the profitability of oil and gas production. That is why it is vital for Russia not only to use the Arctic resources efficiently but also to maintain the existing environmental and climatic balance in the region. For the same reason, it is essential to have a demarcation of the borders in the Arctic that is in no way ambiguous and is recognised by the international community. Currently, the borders are set on the basis of the 1982 UN Convention on the Law of the Sea. Under it, a country’s territorial jurisdiction covers only its continental shelf, while the seabed and reserves underneath it, which do not fall under anybody’s jurisdiction, belong to the whole humanity.

n the 1990s, the Russian Arctic was starved of the state’s attention: severe cuts affected the funding of the icebreaker fleet, support for the indigenous peoples of the North and the Arctic, polar research programmes, while North Pole drifting station projects were cancelled altogether. Now Russia is only partially restoring the scale of its state presence in the Arctic to the levels of the late Soviet period. Indeed, is there an alternative to Russia developing the Arctic? Yet becoming an Arctic nation, is not granted automatically but requires painstaking work every single day in order to obtain new knowledge of the natural and social processes under way in the Arctic zone. What would Russia be without the Arctic in terms of its area and gross domestic product? It would move down a dozen positions in all international ratings. There is no alternative to Russia developing the Arctic, not only because of the new opportunities being offered by its continental shelf but also because of the potential of urban development, natural resources and demography. Moreover, following the independence of the Central Asian and South Caucasus republics, Russia has become a more northern country, so the development of the Arctic for it is simply inevitable. At the same time, however, the question arises of how to ensure the country’s new presence in the Arctic economically and efficiently. Why is it that the absolutely justified plan of

TRAVEL DESTINATION – RUSSIAN ARCTIC travel.rbth.com/destination/arctic

Russia’s large-scale return to the Arctic is being implemented so slowly? Here, one should make one clear distinction. There is a narrow approach to Arctic development. It is demonstrated by companies, both private and fully or partially state-owned, that are engaged in oil and gas production, mining, etc. They are focused on implementing a specific project, be it on land or offshore. These projects, as a rule, are governed by market-economy principles and envisage a generation of profit in the medium

The art of a state Arctic policy is to ensure a harmony between the two approaches. term. But there is also a broad approach, that of the state, which goes beyond a balance sheet of costs and benefits.This approach is concerned with the development of the whole Russian Arctics. It is important to realise that these are two different approaches that should not be compared or confused but should coexist. The art of a state Arctic policy is to ensure a harmony between them: so that as a result of public-private partnership, the interests of all players are integrated for the sake of a sustainable development of the Russian Arctic in the interests of people living there. Aleksandr Pilyasov – director of the North and Arctic Economy Center under the Council for the Study of Productive Forces; professor of economics.

interest The Arctic has recently been gaining growing geopolitical significance. The main reason for this is climate change. ANDREY GUBIN SPECIAL TO RBTH

In late 2012, Russian President Vladimir Putin said that the Northern Sea Route was economically more profitable than the Suez Canal, making it extremely important for Russia. He said:“Russia intends to considerably expand its network of specially protected natural areas in the Arctic and to step up security there. Northern territories account for more than 80 per cent of Russian gas production, over 90 per cent of its nickel and cobalt. That region makes up 12-15 per cent of the country’s GDP and about a quarter of Russian exports.” The Arctic region has become a focal point for the interests of several states, which has prompted Russia to take decisive actions in order to retain control over a huge sea area of more than 1 million square metres. In August and September 2013, a hydrographic survey ship and a tug boat of the Russian Northern Fleet carried out a survey mission to the Franz Josef Land archipelago. They were accompanied by a special-purpose submarine force of the Northern Fleet, whose task was to ensure the safety of the mission. In October 2013, a force of 10 warships headed by the nuclear-powered missile cruiser Pyotr Velikiy and reinforced by nuclear icebreakers made a 2,000-mile voyage across the Barents Sea, the Kara and the Laptev seas covered by ice. Their destination was the New Siberian Islands in the

to Hunt: Aurora Pho ost of make the m ircle C r la o your P ortunities photo opp BTH.COM TRAVEL.R

estuary of the river Lena. It would appear that the Russian state is determined to stick to constant naval presence in the Arctic. The Northern Fleet has an aircraft carrier, the Admiral Kuznetsov. It is carrier aviation that is meant to play a key role in maintaining air supremacy in the region. Warships capable of operating in the Arctic zone will come into service with the Russian Navy over the next 10 years. Russia’s state policy in the Arctic to 2020 and beyond envisages a strengthening of the coast guard and border control functions. To this end, Russian specialpurpose military units have performed a number of operations on the Kola Peninsula, paying particular attention to practising combat actions beyond the Polar Circle. Over the next several years, Russia may deploy two brigades in the Arctic to protect its military facilities and the infrastructure of the Northern Sea Route. The Russian section of the Arctic is under constant foreign watch: Nato aircraft, ships and submarines as well as representatives of various research bodies and non-governmental organisations are actively exploring the region. In this situation, a security question may arise. Russia would not be able to put up with them calmly, as this region is vital for it from the point of view of national interest.The leadership will have to show restraint and firmness in order to resolve all disagreements through political means. Moscow will certainly not become the one to start a“battle for the Arctic”,but it will not allow an infringement of its rights either.

Tips for rs: adventure ive rv su how to ra in the tund

BTH.COM TRAVEL.R

RUSSIA BEYOND THE HEADLINES

Opinion

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

LINKED BY GAS FOR DECADES Vladimir Feigin ANALYST

KONSTANTIN MALER

EU DEPENDENT ON RUSSIAN GAS STANISLAV ZHIZHNIN RESEARCHER

ritish Prime Minister David Cameron claimed that Russia is more dependent on the European gas market. He noted that in the case of possible EU sanctions, the EU should diversify gas supplies in the long term in order to be less dependent on Russia. Later, US Secretary of State John Kerry declared that the US would be able to supply more gas than the EU consumes.The agenda of the EU summit scheduled for this month contains a point on the development of a plan to diversify gas supply sources and reduce dependency on Russian gas

supplies. According to 2013 data from Eurostat, Russian gas accounted for about 25 per cent of total EU gas supplies. However, the Baltic states, Finland, and several Eastern European countries are com-

This creates thousands of jobs, and provides for the regular functioning of core industries. pletely dependent on Russian gas supplies, and a number of other countries depend on Russia for up to 40 per cent of their gas supplies. Russian gas supplies enable European countries to receive tangible econom-

ic benefits that amount to hundreds of billions of dollars provided for heating, power plants and businesses. This directly or indirectly creates thousands of jobs, and provides for the regular functioning of a whole host of core industries. In other words, there is a solid system of mutual economic benefit. According to Laszlo Varro, head of the Gas, Coal and Power Market Division of the International Energy Agency (IEA), the EU countries are going to remain the largest consumer of Russian gas over the next decade. This is partially because of economic realities, as replacing Russian gas supplies will require significant financial resources, and the

price for gas from new external sources may be substantially higher than the price for Russian gas. The EU policy aimed at improving energy efficiency is one of the steps taken to reduce dependency on Russian gas supplies, along with increases in the use of renewable energy sources. While energy efficiency policies have proven to be effective, hopes for actively developing alternative energy sources have not yielded great results. The EU 20-20-20 programme, which aims to increase the use of renewable energy to 20 per cent of the total energy balance in the EU by 2020, has been stalled. Stanislav Zhiznin is a professor at the Moscow State Institute of International Relations and the president of the Center of Energy Diplomacy and Geopolitics. rbth.com/tag/gas

ussia and the countries of the European Union have been linked by gas supplies for a long time.The Soviet Union began to supply gas to Europe at the end of the 1960s. Then, the Soviet gas industry was at an early stage of development; supplies were shipped in limited volumes and only to neighbouring countries. In Europe, the gas industry was also in its infancy — the development of a field in Groningen in the Netherlands was just beginning. Russian gas and European gas evolved over the same period, and in ways that have created deep ties. In the 1970s, the framework of the Council for Mutual Economic Assistance (Comecon) realised a project for developing a large gas field in the Urals city of Orenburg and creating the Soyuz Pipeline for gas export. The most dramatic stage was the deal that provided for the construction of the huge Urengoy-Uzhgorod Pipeline, which would provide for the organisation of large-scale exports of Russian gas to western Europe.The construction of the pipeline, which stretches more than 3,100 miles (4,989 kilometres) was a massive undertaking, involving both Soviet and European manufacturers.The pipeline connects the Siberian gas field of Urengoy with the city of Uzhgorod in western Ukraine. From there, gas can be supplied to countries in

RUSSIA BEYOND THE HEADLINES (RBTH) IS SPONSORED BY ROSSIYSKAYA GAZETA (RUSSIA). ITS PRODUCTION DOES NOT INVOLVE THE EDITORIAL STAFF OF THE NATION. RBTH IS FUNDED THROUGH A COMBINATION OF ADVERTISING AND SPONSORSHIP REVENUES, TOGETHER WITH SUBSIDIES FROM RUSSIAN GOVERNMENT AGENCIES.

RUSSIA BEYOND THE HEADLINES EVGENY ABOV PUBLISHER PAVEL GOLUB EDITOR-IN-CHIEF KONSTANTIN FETS EXECUTIVE EDITOR GLEB FEDOROV EDITOR KUMAR KRISHNAN ASSOCIATE EDITOR (THE NATION) ANDREY SHIMARSKIY ART DIRECTOR ANDREY ZAITSEV HEAD OF PHOTO DEPT MILLA DOMOGATSKAYA HEAD OF PRE-PRINT DEPT MARIA OSHEPKOVA LAYOUT

OUR EDITORIAL VOICE IS INDEPENDENT. OUR OBJECTIVE IS TO PRESENT, THROUGH QUALITY CONTENT AND OPINION, A RANGE OF PERSPECTIVES ABOUT RUSSIA AND THE REST OF THE WORLD.

ROSSIYSKAYA GAZETA ALEXANDER GORBENKO CHAIRMAN OF THE BOARD PAVEL NEGOITSA GENERAL

IN BUSINESS SINCE 2007, WE ARE COMMITTED TO MAINTAINING THE HIGHEST EDITORIAL STANDARDS AND TO SHOWCASING THE BEST OF RUSSIAN JOURNALISM AND THE BEST WRITING ABOUT RUSSIA. IN DOING SO, WE BELIEVE THAT WE ARE FILLING AN IMPORTANT GAP IN INTERNATIONAL MEDIA COVERAGE. PLEASE E-MAIL EDITORTH@RBTH.COM IF YOU HAVE ANY QUESTIONS OR COMMENTS ON OUR OWNERSHIP OR EDITORIAL STRUCTURE. INTERNET ADDRESS WWW.RBTH.COM EMAIL EDITORTH@RBTH.COM E-PAPER IS AVAILABLE AT WWW. RBTH.COM TEL +7 (495) 775 3114 FAX +7 (495) 988 9213 ADDRESS 24 PRAVDY STR, BLDG 4, FLOOR 12, MOSCOW, RUSSIA, 125 993

DIRECTOR VLADISLAV FRONIN CHIEF EDITOR TO ADVERTISE IN THIS SUPPLEMENT CONTACT SALES@RBTH.COM © COPYRIGHT 2014, FSFI ROSSIYSKAYA GAZETA. ALL RIGHTS RESERVED ANY COPYING, REDISTRIBUTION OR RETRANSMISSION OF ANY OF THE CONTENTS OF THIS PUBLICATION, OTHER THAN FOR PERSONAL USE, WITHOUT THE EXPRESS WRITTEN CONSENT OF ROSSIYSKAYA GAZETA IS EXPRESSLY PROHIBITED. TO OBTAIN PERMISSION TO REPRINT OR COPY AN ARTICLE OR PHOTO, PLEASE PHONE +7 (495) 775 3114, OR EMAIL EDITORTH@RBTH.COM WITH YOUR REQUEST. RBTH IS NOT RESPONSIBLE FOR UNSOLICITED MANUSCRIPTS AND PHOTOS.

central and western Europe. The Mannesmann factories in West Germany were scheduled to provide a significant part of the large-diameter pipes for this gas pipeline. Another portion of the pipes would be provided by a mill in the city of Khartsyzsk, in the Kharkov region of Ukraine. The Ukrainian plant had been producing these pipes for some time, but the German pipes were more suited to several sections of the new pipeline. Additionally, the number of pipes needed was so great that no single factory could be expected to produce them. The Italian firm Nuovo Pignone was contracted to provide gas compressors. Unfortunately, however, the project began just after Soviet troops invaded Afghanistan.The United States called for sanctions against the Soviet Union and, as part of the sanctions, the US demanded that its European allies refuse to supply pipes and equipment to build Urengoy-Uzhgorod.Without the pipeline, the entire deal to supply Europe with Russian gas would fall apart.The United States, which was not a direct participant in the agreement, would lose nothing from its collapse, but the ramifications would be serious for many European countries. Vladimir Feigin is the Russian co-speaker of the EU-Russia Gas Advisory Council, EU-Russia Energy Dialogue. rbth.com/35809

COMMENTS AND LETTERS FROM READERS, GUEST COLUMNS AND CARTOONS LABELLED “COMMENTS”,“VIEWPOINT” OR APPEARING ON THE “OPINION” AND “COMMENT & ANALYSIS” PAGES OF THIS SUPPLEMENT ARE SELECTED TO REPRESENT A BROAD RANGE OF VIEWS AND DO NOT NECESSARILY REPRESENT THOSE OF THE EDITORS OF RUSSIA BEYOND THE HEADLINES OR ROSSIYSKAYA GAZETA. PLEASE SEND LETTERS TO THE EDITOR TO EDITORTH@RBTH.COM

THIS ISSUE WAS SENT INTO PRINT ON JUNE 2

SPECIAL SUPPLEMENTS AND SECTIONS ABOUT RUSSIA ARE PRODUCED AND PUBLISHED BY RUSSIA BEYOND THE HEADLINES, A DIVISION OF ROSSIYSKAYA GAZETA (RUSSIA), IN THE FOLLOWING NEWSPAPERS: THE DAILY TELEGRAPH, UNITED KINGDOM • THE NEW YORK TIMES, THE WALL STREET JOURNAL, THE INTERNATIONAL NEW YORK TIMES, THE WASHINGTON POST, UNITED STATES • LE FIGARO, FRANCE • EL PAÍS, SPAIN • LA REPUBBLICA, ITALY • LE SOIR, BELGIUM • GEOPOLITICA, SERBIA • ELEFTHEROS TYPOS, GREECE • THE ECONOMIC TIMES, INDIA • MAINICHI SHIMBUN, JAPAN • GLOBAL TIMES, CHINA • THE NATION, THAILAND • LA NACION, ARGENTINA • FOLHA DE SÃO PAULO, BRAZIL • EL OBSERVADOR, URUGUAY • JOONGANG ILBO, SOUTH KOREA • THE SYDNEY MORNING HERALD, THE AGE, AUSTRALIA • GULF NEWS, AL KHALEEJ, UNITED ARAB EMIRATES.

RUSSIA BEYOND THE HEADLINES

Opinion

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

Alexei Knizhnikov EXPERT

n the past decade, the world has seen a rapid increase in the use of renewable energy, including wind, solar, biomass, biofuels, and small hydroelectric power plants. This increase has been fuelled by a number of factors, including the need to lower the impact on the environment and human health (particularly the need to reduce greenhouse gas emissions) and the need to reduce dependency on energy imports, especially as oil prices have risen to, and at times exceeded, $100 per barrel. Over the past few years, global investment in renewable energy development has consistently exceeded $200 billion per year. Between 2010 and 2013, wind power capacity skyrocketed by 150 per cent, surpassing 300 gigawatts (GW). Compared with 2010 figures, solar power capacity has almost doubled, reaching 135 GW in 2013. These figures are comparable with the total capacity of the

power plants of Russia’s energy monopoly, United Energy Systems, which can produce 227GW per year. The United States, China, Germany, India, Brazil and Spain are the global leaders in clean energy. A 2013 analysis of the Group of 20 countries showed that all of the G-20 countries, with the exception of Saudi Arabia and Russia, have made significant advancements in renewable energy capacity in recent years. According to different estimates, Russian wind-power capacity is 13-15 megawatts (MW), comprising less than 0.005 per cent of global wind-power output. At the end of 2013, Russia’s largest solar-power plant, with a capacity of 5MW, began operating in Dagestan. This, however, is still only 0.005 per cent of total global capacity. Against this backdrop, experts sometimes raise the argument that Russia has large reserves of fossil fuels, and, therefore, has no need to develop renewable energy sources. Yet international experience shows that this argument in untenable. The

KONSTANTIN MALER

CASE FOR RENEWABLE ENERGY

United States is one of the largest global producers of oil and natural gas, but it is comparable to China in terms of renewable energy use. In contrast, Norway, which is the largest producer of oil and gas in Europe, increased its wind power capacity from 13MW in 2000 to 766MW in 2013. Saudi Arabia, which

started work on its first 1MW solar-power plant in 2014, plans to spend more than $100 billion in order to increase solar-plant capacity to 42GW by 2032. These new sources of energy would provide up to 30 per cent of the country’s electricity. Russia’s potential for renewable energy sources is

NUCLEAR ENERGY A VIABLE ALTERNATIVE TO FOSSIL FUELS Andrei Frolov EDITOR

ussia inherited its nuclear energy sector from the Soviet Union and can take pride in the fact that the world’s first nuclear power station was launched in 1954. In the 1970s-1980s, the sector enjoyed a period of exponential growth, but this was cut short by the Chernobyl disaster in 1986 and the breakup of the Soviet Union that followed shortly after. As a result, in the 1990s and the early 2000s, the development of installed capacity was in stagnation. In the post-Soviet period, only four power units were put in operation.

Still, Russia’s existing 33 power units, with a total rated capacity of 24.25 gigawatts (GW) generate about 16 per cent of all power in the country. Yet, this is far from the limit of the country’s ambitions.Ten more power units are currently under construction (including two reactors on the floating nuclear power station Akademik Lomonosov) with a total rated capacity of 9.2GW. The plan is to increase the share of nuclear-generated power in Russia to 25-30 per cent by 2030 and to 45-50 per cent by 2050, which means the construction by 2030 of some 32GW in new capacities, although by that time some of the current power units will already be de-

commissioned. There are several reasons for Russia’s ambitious plans for developing its nuclear resources. The first is that the Russian nuclear sector consists of some 500 enterprises

Nuclear power is important for Russia’s continued economic development. with about 20,000 employees. These employees are divided among four major industry segments: creation of nuclear fuel, nuclear power generation, nuclear weapons maintenance and development, and research

at scientific institutions. Russia’s list of nuclear assets includes the world’s most powerful icebreakers, which run on nuclear power. A large-scale programme for growing nuclear power ensures a natural development for the sector and provides employment for highly qualified experts not only within the state nuclear holding Rosatom, but also in other sectors, such as machine engineering and construction. The second reason is an economic one. In developing its nuclear energy sector, the Russian government is achieving several goals. By increasing the share of nuclear power in the country’s energy balance, it is possible to maintain eco-

great. Its traditional source is wood, and it uses an estimated 20-30 million cubic metres (70.6-105 million cubic yards per year). However, the use of wood and biomass to produce electricity is not widespread. There have been some successful projects that use biogas produced by processing industrial waste, but

nomic growth without increasing carbon dioxide emissions and violating Russia’s quotas under the Kyoto Protocol. In addition, the emphasis on nuclear power makes it possible to reduce domestic consumption of oil and gas and reserve these resources for export, which is far more advantageous from the economic point of view than selling them at discounted rates on the domestic mar-

Nuclear energy has the potential to be an important export for the Russian Federation. ket. Additionally, transporting oil and gas to thermal power stations across Russia is logistically difficult and expensive, which makes exporting them even more cost-effective and beneficial to the economy.

this renewable energy source’s potential is hardly being met on a national scale. The fact that several regions in Russia, such as the Kola Peninsula, Lake Baikal and the Altai are unmatched in terms of weather conditions for the development of wind energy resources stands in sharp contrast with Russia’s share of wind and solar power production. The good news is that the authorities have started to pay attention to Russia’s need to develop the renewable energy sector. The federal law governing electricity adopted in 2003 contains measures to support the use of renewable energy by facilitating power-grid connectivity, as well as obligations to purchase the energy produced by these power plants to compensate for grid losses. However, these measures have failed to bring about any significant positive changes. Alexei Knizhnikov is the director of the Environmental Policy Program at the World Wildlife Fund Fuel and Energy Complex.

Finally, given Russia’s climate and limited opportunities for developing other renewable sources of energy, such as solar power, nuclear energy may be Russia’s best chance to create a viable alternative to fossil fuels to provide electricity and heating across the country. Nuclear power is important for Russia’s continued economic development. Keeping up with the latest technologies in the sector keeps thousands of highly qualified Russian scientists employed. It is also the best chance to develop renewable sources of energy. And nuclear energy has the potential to be an important export for the country, one that someday could counter the Russian economy’s long-standing dependence on fossil fuels. Andrei Frolov is editor in chief of the magazine Eksport Vooruzheny (Arms Exports).

RUSSIA BEYOND THE HEADLINES

History

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

Territories After the reunion with Crimea, many recalled the loss of Alaska following the Crimean war in 19th century

Why did Russia sell Alaska? A cheque for $7.2 million, for the purchase of Alaska.

In 1867, Russia sold Alaska to the US for $7.2 million. A mere 50 years later, the Americans had earned that amount 100 times over. GEORGY MANAYEV

Many people still think that the Americans either stole Alaska from the Russians or leased it and did not return it. Despite the widespread myths, the deal was an honest one, and both sides had valid reasons to make it. In the 19th century, Russian Alaska was a centre of international trade. In the capital, Novoarkhangelsk (now Sitka), merchants traded Chinese fabrics, tea and even ice, which the southern United States needed before the invention of the refrigerator. Ships and factories were built, and coal was mined. People already knew about the numerous gold deposits in the area. Selling this land seemed like madness. Russian merchants were drawn to Alaska for the walrus ivory and the valuable sea otter fur. Trading was done by the Russian-American Company (RAC), which was started by 18thcentury Russian businessmen, courageous travellers and entrepreneurs.The company controlled all of Alaska’s mines and minerals, it could independently enter into trade agreements with other countries, and it had its own flag and currency. These privileges were granted to the company by the imperial government. The government not only collected massive taxes from the company, it also owned a large part of it — the tsars and their family members were among the RAC’s shareholders. The main ruler of the Russian settlements in America was the talented merchant Alexander Baranov. He built schools and fac-

RUSSIAN HISTORY IN DETAIL

FINE ART IMAGES / VOSTOCK PHOTO

RBTH

New Russian dialect found Linguists have discovered a new Russian dialect in Alaska. Spoken in the small village of Ninilchik, established when Russian settlers arrived in the area in 1847, the language has followed a separate path of development for more than a century. It contains words borrowed from Siberian dialects, Eskimo, English and Indigenous Athabaskan.

Consequently, the RAC was transferred to state subsidies - 200,000 rubles per year.

tories, taught the native people to plant rutabaga and potatoes, built fortresses and shipyards, and expanded the sea otter trade. Baranov called himself the“Russian Pizarro” and took a liking to Alaska not only with his purse, but also with his heart — he married the daughter of an Aleut chief. Under Baranov (17901818), the RAC brought in enormous revenue: more than 1,000 per cent profit. When an ageing Baranov resigned his duties, he was replaced by the captain lieutenant Hagemeister, who brought with him new employees and shareholders from military circles. Statute now dictated that only naval officers could lead the company. The strongmen quickly appropriated the profitable business, but it was their actions that ruined the company.

ND A ROCK A BETWEEN E H T : L AC E A HARD P RY S’ CENTU K C A S S O C GLE O F ST R U G /35 4 6 5 m o .c th rb

The new masters set astronomical salaries for themselves — common officers earned 1,500 rubles per year (this was comparable to the salaries of ministers and senators), while the head of the company earned 150,000 rubles.They bought

In the capital, Novoarkhangelsk, merchants traded Chinese fabrics, tea and even ice. fur from the local population for half the price. As a result, over the next 20 years, the Eskimos and Aleuts killed almost all the sea otters, depriving Alaska of its most profitable trade. The native people suffered and staged uprisings that the Russians quashed by firing on the coastal villages from mili-

tary ships.The officers began to look for other sources of revenue.The trade in ice and tea thus began, but, struck with ill-fortune, the businessmen could not organise this sensibly either, and lowering their salaries was unthinkable. Consequently, the RAC was transferred to state subsidies - 200,000 rubles per year. But even this did not save the company. Then the Crimean War broke out, and Britain, France and Turkey stood against Russia. It became clear that Russia could neither supply nor defend Alaska — the sea routes were controlled by its enemies’ ships. Even the prospect of mining gold dimmed. There was a fear that the British might block Alaska, and that Russia would then be left with nothing. Tensions between Moscow and London grew, while re-

IE S : F T WO C IT A TA L E O RE U T U F AND T H E PAST N IA S S U OF THE R A R C T IC /3 6 0 4 3 rbth .co m

lations with the American authorities were warmer than ever. Both sides almost simultaneously came up with the idea of selling Alaska. So Baron Eduard de Stoeckl, Russia’s envoy to Washington, opened talks with US Secretary of State William Seward on behalf of the tsar. The official handover of the land occurred in Novoarkhangelsk. The American and Russian soldiers lined up next to the flagpole, from which the Russian flag started its descent to the accompaniment of a canon salute. However, the flag got tangled at the top of the pole. The sailor who climbed up for it threw it down, and it accidentally landed on Russian bayonets. It was a bad omen! Afterward, the Americans started requisitioning the buildings of the town, renamed Sitka. Several hundred Russians who decided not to take American citizenship had to evacuate on merchant ships, and they did not reach home until the following year. Only a short time passed before gold started flowing from the “ice box”: the Klondike gold rush started in Alaska, bringing the States hundreds of millions of dollars. Of course, it was insulting. But it is impossible to know how relations between the world’s largest powers would have developed if Russia had not escaped in time from the problematic and unprofitable region, which only talented and courageous merchants, but not navy bureaucrats, could extract revenue from.

S: E TEMPLE D E S O L AT E V A S H OW TO S CHURCHE R U SS IA N 7 5 3 5 /3 rbth .co m

RUSSIA BEYOND THE HEADLINES

History

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

Beyond Fabergé: The great Russian jewellers

DPA/VOSTOCK-PHOTO

Jewelry The 19th century produced many talented jewellers in Russia

Fabergé was not the only master craftsman and jeweller in Imperial Russia. Other talented artisans created enamelwork and samovars for the wealthy. MARINA OBRAZKOVA

FOTODOM

The whole world has heard of jeweller Peter Carl Fabergé, purveyor to the imperial court of Russia and the creator of the celebrated Fabergé eggs, yet the 19th century produced many other talented jewellers in Russia. Although they are not household names, their works are no less valuable. Until the mid-19th century, jewellers in Russia were considered to be ordinary craftsmen. It was only when they began to take part in international exhibitions that their names turned into commercial brands. The Bolins, a family of Swedish jewellers, first came to Russia in the early 19th century, several decades before Fabergé. In total, they served six Russian emperors – no easy task. Among other duties, their main assignment was to design and make trousseaux, or bridal outfits, for tsars’ daughters. A wedding set alone could cost as much as a house in the centre of St Petersburg. It usually consisted of a wedding crown, several diadems, a necklace, and bracelets. Complementing these treasures were also rings and earrings. On the eve of a wedding, the princess’ new jewels were displayed for everyone to see. That was an old custom, as the value of a bride was determined by how much her trousseau had cost. The House of Bolin ope-

PHOTOSHOT/VOSTOCK-PHOTO

RBTH

A kovsh (1) from a collection of Viktor Vekselberg’s Link of Times cultural and historical foundation at the private Faberge Museum. A Fabergé piece (2) from Queens Gallery at Buckingham Palace exposition. And (3) Imperial presentation charger marked ‘Sazikov’ with the Imperial warrant.

MILESTONE DATES

Peter Carl Fabergé: the best Russian jeweller 1882 • Carl Fabergé takes sole responsibility for running the family business (House of Fabergé), launched in St Petersburg by his father Gustav in 1842.

1900 • Fabergé’s work represented Russia at the World Fair in Paris. The House was awarded a gold medal and the city’s jewellers recognised Carl Fabergé as a maître.

1920 • Peter Carl Fabergé never recovered from the shock of the Russian Revolution and died in Switzerland in 1920. The House was nationalised in 1918.

FABERGÉ EGGS

rated in Russia until World War I. At its outbreak, the then-owner of the firm,Wilhelm Bolin, happened to be in Germany. He tried to return to Russia via Sweden but could not go further than Stockholm, where he subsequently opened a store and soon began to work for the royal family of Sweden. The jewellery workshop of merchant Pavel Sazikov dates back to 1793. His son Ignaty brought to the Great Exhibition of 1851 in London a collection of works inspired by traditional peasant life. The items on display featured a bear with its tamer, a milkmaid, a candelabrum commemorating the Battle of Kulikovo

in 1380, and other works inspired by folk themes.The candelabrum received a silver medal at the exhibition, and Ignaty returned to Russia a famous man. At theVienna Exhibition in 1873, jeweller Ivan Khlebnikov created a sensation with his samovar and tea set. The samovar stood on rooster feet and had handles in the form of rooster heads, while the cups in the tea set were decorated with precious stones and enamel. It was an object of unusual beauty that could not but attract interest and admiration. Khlebnikov returned from the exhibition proud as a cockerel and threw him-

were made by The House of Fabergé from 1885 to 1917. 52 of them were ordered by the Imperial family.

survived to the present day. The trademark is now owned by Fabergé Limited.

are dispayed in Russia, including Moscow’s Kremlin Armory Museum and the Russian national Museum.

VOICES OF READ RUSSIA DOWNLOAD OUR SPECIAL ISSUE NOW AND DISCOVER THE LATEST TRENDS IN RUSSIAN LITERATURE!

self into his work with renewed energy. He took his themes from history and literature: scenes from the lives of Tsar Ivan the Terrible and Russian Orthodox Church saint Sergius of Radonezh, or the poems of Mikhail Lermontov. The most interesting of Khlebnikov’s works are his enamels. The State Historical Museum in Moscow has a wine set consisting of a carafe in the form of a rooster and cups in the form of chickens decorated with champlevé enamelling. He also made silver and gold dishes using the same technique. Enamel was the trademark technique of another outstanding Russian jeweller, Pavel Ovchinnikov. He was famed for his filigree, painted and stained-glass enamels. Filigree enamel used to be popular in Kievan Rus, where it had first been brought from Byzantium, but the technique was lost during the years of the Mongol invasion of Russia. It was Ovchinnikov who revived that lost craft.

His was an unusual life story. Born a serf, he displayed a talent for drawing at a very young age and was sent to become an apprentice to a gold- and silversmith. After eight years of toil, he managed to save enough money to buy his freedom. He subsequently married and opened a workshop of his own. By the time Ovchinnikov was just 24, he had an annual turnover of half a million rubles and he employed 600 people. By the age of 35, Ovchinnikov had become a purveyor to the Imperial Court and an honorary citizen, and had been decorated with several state awards. After the Russian Revolution of 1917, jewellers began to leave Russia. They found it impossible to work in a country blighted by hunger and desolation, where jewellery was being expropriated for the needs of the working class. The craft of the jeweller was later revived, albeit by a different school and with a different aesthetic.

Crack that Russian enigma rbth.com/products/read_russia

RUSSIA BEYOND THE HEADLINES

Literature

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

Crimea The peninsula has been a special place for Russian writers since Alexander Pushkin was exiled there

A fertile ground for literary works Russian writers have appreciated Crimea as a quiet haven – remote from Europe, the bureaucrats of Moscow, and the sovereigns of St Petersburg.

Max Voloshin is the most famous poet to live in Crimea.

Profile Poet who preached peace

Maximilian Voloshin: a spiritual bard who accepted everyone

ALEXANDRA GURYANOVA RBTH

The continuing unrest in Ukraine brings to mind the words and actions of Maximilian Voloshin (18771932), a Ukrainian-born Russian poet. YAN SHENKMAN RBTH

Alexander Pushkin was among the first of the great Russian writers to discover Crimea, albeit unwillingly. He was exiled from St Petersburg to the south for his poems about freedom. However, Pushkin was either too incorrigible or the Crimean air was too heady, because his exile turned into rehabilitation. “Resurrected feelings, clear mind,” he wrote in the poem “Tavrida”(the Greek name for Crimea). Pushkin’s discoveries in Crimea included the poetry of Ovid. He learned that his Roman counterpart was also exiled to Crimea at the behest of a despotic emperor. In his Crimean poems, Pushkin compares his asceticism with the fate of the ancient poet. Maximilian Voloshin, a poet and artist was also inspired by this breathtakingly beautiful peninsula.Voloshin personified a certain simplicity and naturalness in Russian bohemia. He also owned a house in Koktebel, where he invited diverse guests regardless of their rank or political views. He challenged his friends (among whom were Marina Tsvetaeva, Osip Mandelstam, Andrew White, Maxim Gorky and Alexei Tolstoy) to abandon the conventions of the day and instead revel in creativity. During the civil war (1917-1922), Crimea was the last foothold of resistance for the White Army. Refugee ships departed from its ports carrying scientists, artists, and writers. The year 1920, the year of the Bolsheviks’ final victory, was an important milestone for Russian literature. The play “Flight” by Mikhail Bulgakov reflects the last days of old Russia. Crimea was a sort of Noah’s Ark in distress. Here White Army soldiers, priests, and aristocrats from St Petersburg were trying to understand

what had happened to Russia and how to find their place in the world. Vladimir Nabokov also emigrated through Crimea. However, he preferred to close his eyes to the disaster and create his own myth. The main character of the

Crimea has continued to attract creative people who disagree with [...] Moscow. short story“Spring in Fialta”(in which Fialta is a collage of many towns of the peninsula, including Yalta, Sudak and Kerch), a happy family man comes to Crimea only to meet Nina – a woman that he befriended in 1917 and whom he flirted with from time to time. Now, she is married. For Nabokov, Nina symbolises Russia, and 1917 represents the coming changes; she is

killed in a car accident, colliding full speed with a travelling circus van. In later novels, Nabokov is nostalgic for liberal Eastern European power. The tsar’s palace stands among palm trees, and the tsar contemplates the sea through the window. In Nabokov’s imaginary Russia, Crimea is the ideal place for the capital. Even after the departure of an entire galaxy of prerevolutionary writers, Crimea continued to attract creative people who disagree with the actions of the authorities in Moscow. One of these was the young poet and translator, Joseph Brodsky, a vulnerable man who had yet to win the Nobel Prize or reach an uneasy truce with fame. In Crimea, he found an endearing combination of his favorite elements – wine and the sea, which appear in all of his “Crimean” works. In the narrative poem

“Homage to Yalta,” Brodsky talks about the fragility and randomness of earthly life, which is ruled by invisible, ruthless fate. In the poem“A Winter Evening in Yalta,” he argues with Goethe, that genius of romanticism: “Oh, moment stop!You are not that magnificent, but inimitable!” The idea of Crimea’s freedom is probably best expressed in “The Island of Crimea,” a cult novel written by Vasily Aksyonov in the 1970s. Aksyonov went farther than Nabokov ever did, rewriting history and reshaping geography. In this novel, Crimea is an island, not a peninsula, and the Bolsheviks do not reach it until 1920. Unconquered, it becomes an independent state. Crimea is today, and formerly, part of Russia. Somehow its destiny as an artistic haven seems more inevitable, and clear, than its geopolitical fate.

One day during the Russian Civil War (1917-1921), a group of Bolsheviks gathered at a dacha somewhere in Crimea. Counter-intelligence forces discovered the underground meeting, but the Bolsheviks managed to flee to the mountains first. One of them showed up at the house of MaximilianVoloshin, asking for shelter.Voloshin hid him in the attic. When counter-intelligence officers scouring the area arrived to search the poet’s house,Voloshin treated them to fine wine and dramatic tales of medieval knights. His hospitality and charm distracted the officers, and they never made it to the attic. After they left, Voloshin let the Bolshevik out. As he departed, Voloshin told the man: “Mind you, when you come to power, I’ll do the same to hide your enemies.” Voloshin, who was born in Ukraine but wrote in Russian, refused to serve in the army and even sent a personal letter to the defence minister explaining that military service was against his convictions as a pacifist. His pacifism was closely linked to his belief in Rudolf Steiner’s Anthroposophy, and Voloshin was involved in developing a new, intellectualised kind of spiritualism. He also took part in building an anthroposophical centre in Switzerland, which beaome a symbol of brotherly relations between different nations. Immediately after the 1917 Revolution, Voloshin

settled in Koktebel, a beautiful seaside spot on the southern coast of the Crimean peninsula. “I am not trying to escape from anyone, am not emigrating anywhere,”he said.“Not being on either of the conflicting sides, my life is solely about Russia and what is happening here…I need to be in Russia to the very end.” Voloshin’s house in Koktebel turned into a literary salon. Writers of diverse artistic and political views were drawn to visit him: Andrei Bely, Maxim Gorky, Aleksey Tolstoy, Alexander Grin, Marina Tsvetaeva, Osip Mandelstam, Mikhail Bulgakov, Korney Chukovsky, and many others. During the Civil War, power in Crimea kept changing hands between the Red Army and the White. ButVoloshin accepted everyone. His house was a shelter, as he put it, both to“a Red leader and a White officer.” “The Red leader”was the prominent Hungarian Communist Béla Kun, who committed numerous atrocities in Crimea, killing people in the thousands. But it was Kun who providedVoloshin with a writ of protection, and for a while the authorities left the poet alone. An annual poetry festival has been launched in Koktebel in Voloshin’s memory. Every year in early fall, dozens of poets from different parts of the world come here to celebrate his life and work: from New York, Istanbul, Moscow, Kazan, Riga and Kiev. In the courtyard of Voloshin’s house, now a museum, people bask in the sun, reading poetry and drink fine Crimean cognac while a bronze monument to the man, standing with his back to the sea, watches over them from the embankment.

RUSSIA BEYOND THE HEADLINES

Fashion

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

Trend In recent years, small companies that design, sew and sell clothes all in one place have begun to emerge

Young designers fly the flag of Russian fashion

INNA FEDOROVA RBTH

PATRIARCHY BRIDGE AND CATHEDRAL OF CHRIST THE SAVIOR The Patriarchy Bridge was built in 2004. From one side, visitors see the Kremlin and the river embankment, while on the other side are views of the Central House of Artists and the famous Red October, an erstwhile chocolate factory. The observation deck offers panoramic views of the famous House on the Embankment and the Zamoskvorechye Merchant District. Tours on the deck are available only as a part of the group by prior arrangement (+7) 495 637 28 47. Address: 15 Volkhonka street (subway station Kropotkinskaya)

The founders of the Fancy Crew store adhere to a more conceptual format. They have gathered several brands of casual men’s clothing under one roof. Being guided by their own taste in everything, they have created an authentic space where old brick walls have hangers with plaid shirts and beige slacks. “Since the brands are unknown to a wide range of buyers, we always try to give every person who visits us a little introductory tour. Especially because s o m e brands a r e unknown not only in Russia, but also in Europe and Asia,” says the co-owner of the showroom Alexander Uryupichev. We do not have random things that we have obtained accidentally – they all have their own distinctive details. To some extent, we even deal with public awareness, by telling people that there is another product, which

TOWERS OF MOSCOW-CITY The new Empire and Federation Towers, located in the business district close to the city center, are some of the tallest buildings of the Russian capital. From the terraces of the Moscow-City, you can enjoy the inspiring views of the Moscow River and the western part of the city. Impressive views of Moscow open up to those who ascend the high-speed elevator to the 58th ﬂoor of the new terrace of the Empire Tower (780-feet). The observation platform of the Empire tower is accessible only with a tour group. Tickets are 600 rubles ($17) and can be purchased at smotricity.ru or by telephone 8 (499) 272 48 46. Address: 6 Presnenskaya Naberezhnaya (subway station Vystavochnaya)

238 m

Read our special topic about Russian fashion

rbth.com/tag/ russian+fashion+stories

Anastasia Romantsova lookbook FALL/WINTER 2014-2015

BOLSHOY KAMENNY BRIDGE (GREATER STONE BRIDGE) Built in 1938, this bridge connects Borovitskaya Square with Bolshaya Polyanka Street. From here, view the soaring panoramas of Moscow, from the majestic Red Square and to the restored Cathedral of Christ the Savior. Address: Kremlevskaya naberezhnaya (subway station Borovitskaya)

8.8 m

PRESS PHOTO

For the first time in 100 years, small-scale fashion businesses are growing in Russia. Industry experts highlight this as one of the key trends in the Russian clothing market today. During the time of the Russian Empire, people either made their clothes themselves or had them made by private studios. Even in the last quarter of the 19th century, there weren’t many large factories that manufactured ready-to-wear clothing and they were all situated in the major industrial cities, for example, in Moscow. During the two decades that a market economy has existed in Russia, a whole generation of young designers has emerged. The narrow circle of experienced designers who started their careers in the Soviet Union has been enlarged by an impressive list of names.

Practically everyone who is interested in this topic is well aware of the graphic dresses made by Victoria Gazinskaya, the perfect female tuxedos made by Dmitry Loginov and the aristocratic maxi dresses of Anastasia Romantsova. But the fact that Kristina Tops sews beautiful skirts made out of heavy natural fabric, that Yanina Vekhteva makes concise and at the same time feminine dresses and that Ruzanna Gukasyan designs glamorous blouses with high collars and impressive puffed sleeves is known to just a few. Visitors to Moscow who are interested in fashion design should look into the Backstage Showroom, where they will be able to see many items by young designers, who are also friends of the store owners. Here fashionistas have the chance to see puffy skirts, jackets with complex tailoring and minimalist pencil dresses. Besides this, many events are held here, including special shows of the brands on display and lectures on the history of fashion and costume.

PHOTO: IKAR.US (TALK)

The last few years have seen a boom in both the small- and medium-scale Russian fashion business, for the first time since the Imperial period.

is not widely known, and has its own unique character.” Interest in clothing and a multi-million Internet audience gave rise to the rapid development of online promotion. Unable to find initial capital from banks or investors, designers have been successfully creating and promoting their brands on the Internet.

Fo r example, in just two-and-a-half years online, fashion store “Oh, my” has made a decent profit. The main gist of their concept, which is innovative for Russia, is that they only sell simple models of dresses, T-shirts, hoodies and long-sleeved shirts made of soft jersey, and the colours are strictly white, gray or black. Another successful example is the St Petersburg brand Bat Norton, which specialises in classic men’s and women’s sweatshirts with bright prints of their own design. Various websites such as Babyswag or FunForMum offer Russian and foreign niche products, which are all made in accordance with an ecology and natural concept, clad with a light Scandinavian accent.

OSTANKINO TV TOWER Ostankino Tower’s observation deck has been open to visitors for over 40 years. From a height of more than 1000 feet, tourists will be treated to great views of northern Moscow and Moscow Region. This observation deck can be visited through guided excursions by appointment only. The excursion lasts about one hour. Pre-registration is by phone at: 8 (495) 926-6111, and a ticket costs 980 rubles ($28) Address: 15 Akademika Koroleva street, bldg. 2, entrance 2 (subway station Alekseyevskaya)

340 m

FERRIS WHEEL AT THE ALL-RUSSIA EXHIBITION CENTER Fans of extreme heights will enjoy great views of Moscow from the 239foot high Ferris Wheel at the All-Russia Exhibition Center – from closed or open cabins, tickets 300350 rubles ($9-$10). Address: All-Russia Exhibition Center (subway station VDNKH)

IVAN THE GREAT BELL TOWER Get a bird’s eye view of Moscow by climbing up the 262-feet bell tower of Ivan the Great – “the ﬁrst skyscraper of the capital,” built in the 16th century. The belfry is located in the heart of the city – on Cathedral Square (adjacent to Red Square). Visitors are able to view the exhibition and access the observation deck, which provides a wonderful view of Kremlin’s Cathedral Square and the old streets of Zamoskvorechye District. You can gain access here 18 0 m by using your ticket to the Kremlin Museum, ticket costs 500 rubles ($14). Address: Kremlin, Sobornaya square (subway station Okhotny Ryad)

103 m 73 m

SPARROW HILLS AND MOSCOW STATE UNIVERSITY MAIN CAMPUS One of the most popular postcard views of the Moscow is from the lookout platform on Sparrow Hills. The lookout platform of Sparrow Hills provides stationary binoculars, which are free for tourists. The views are especially beautiful on a clear day and late at night when the street lamps illuminate the city. The upper ﬂoors of Moscow State University’s (MSU) main building offer an even more breathtaking visage of Moscow. To reserve a visit to MSU, call: 8 (495) 939 29 76. Address: Universitetskaya square (subway station Universitet)

80 m

TRAVEL2MOSCOW.COM

RUSSIA BEYOND THE HEADLINES

Sport

A global media project, sponsored by Rossiyskaya Gazeta (Russia) www.rbth.com

Football For the first time in 12 years, the Russian national football team will compete in the finals of the World Cup

Capello’s team lacks stars but can shoot for the sky

As the World Cup 2014 opens, Russian fans and experts alike are basing their hopes for the national teamnot so much on the players – there are no international stars among them – but rather on the team’s head coach, Fabio Capello. The main feature of the current Russian national team is its organisation. There are no players who could cause a lineup of fans in Brazil, eagerly seeking autographs. The names of most of the players, outside of Russia, are known only to sports experts. Nevertheless, each of the players knows exactly what his role is on the field, and this is where the pressure on the opposing team will come from – good ball control and an organised defence. “The team has become more solid,” says former head coachValery Gazzaev. Yuri Semin, another trainer who at one time also worked with the Russian national team, agrees. “I would like to note the unity that Capello brought to the team. We started to p l ay b e tt e r d e f e n c e , although some of our defenders, because of their age, sometimes cannot keep pace with the fast players

Making it through the group round may not be guaranteed, but it won’t be a surprise. scorer in Russia today – Alexander Kerzhakov. He is the only team member with experience playing in a world championship. In 2002, he travelled to play in Japan. Kerzhakov belongs to the veterans’ group now, and at his club, the St Petersburg Zenit, he is mainly warming the bench. Another possible attacker is the Dynamo player Alexander Kokorin, who undoubtedly has the talent, but not the experience. Moreover, he is not always characterised by his consistency. Therefore, it is in the attack that we will find the Russian team most vulnerable. Recognising the fact that in this tournament, the Russians will be far from the

Until 1969, referees could only send players off. An intermediate penalty did not exist. At the 1970 World Cup (Mexico), referees had yellow and red cards in their pocket for the first time. The USSR national team’s Yevgeny Lovchev received the first warning in the history of the World Cup.

ITAR-TASS

SPECIAL TO RBTH

favourite, fans and experts alike feel that the team’s performance in their group will be strong, especially given the fact that the opponents at this stage are not from the most formidable national teams – South Korea, Belgium and Algeria. “Making it through the group round may not be guaranteed, but it will not be a surprise if it happens. I am convinced that we will make it into the play-offs,” said Vyacheslav Koloskov, honorary president of the Russian Football Union. Vladimir Stognienko, a well-known television newscaster, who will be broadcasting the matches of the Russian national team in Brazil, agrees with him: “I am convinced that we will be in the quarterfinals. Then, if we manage to avoid playing the Germans, I am sure that will go on and on. Although, in principle, just making it past the group round will be a great achievement for us, since in 1986 we did not succeed in doing even that. Moreover, my optimism is based primarily on the coach. Capello is not perfect, but he is the strongest part of our team.” However, Fabio Capello himself is not in a hurry to make any dramatic statements. The World Cup kicks off on June 12 in Brazil. Russia’s first opponent is South Korea.

Before the 1970 World Cup, substitutions did not exist. The starters had to play the whole 90 minutes and, if necessary, extra-time. The first player subbed out in the history of the World Cup was the USSR’s Viktor Serebryannikov.

ILYA ZUBKO

of our opposing teams,”says Semin. The coaching staff has a huge choice when it comes to players in the midfield and on the flanks, where two or three people compete for each spot. The whole game of the Russian team is built on quality midfield play. Nevertheless, there are some issues when it comes to attacking. Scoring goals in Brazil will be the task of the best

The greatest achievement of the Soviet and Russian national teams at the World Cup was fourth place at the 1966 tournament in England. However, Soviet and Russian footballers have managed to set records and hold some other dubious distinctions that have been preserved in the history of international football.

At the 1990 World Cup (in Italy), a team representing Africa reached the quarterfinals for the first time. The “Indomitable Lions” were led by the Russian specialist Valery Nepomnyashchy.

REUTERS

The national team is heading to Brazil, by no means a favourite, yet one can count on them to achieve respectable results.

Fabio Capello has rebuilt the team, bringing to Brazil many young players.

Follow Get the best stories from Russia straight to your inbox RBTH.COM/SUBSCRIBE

RUSSIAN WORLD CUP FACTS

Read RBTH.COM your favourite mobile reader

All the dangers of bad habits in Soviet era posters SHARE YOUR OPINION ON /russianow

/russiabeyond

At the 1994 World Cup (USA), the Russian football team managed an amazing goalscoring feat. For the first time in the history of the World Cup, one player scored five goals during one match. The player was Russian forward Oleg Salenko.

NEXT issue

28 August