Russia and India Business Report by Russia Beyond

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WEDNESDAY DECEMBER 2, 2015

Business Report RUSSIA&INDIA THE ECONOMIC TIMES IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

DIPLOMACY: Intelligence-sharing Focus on joint projects, agreement production on IS ofshows commercial the path aircraft, to others oil and to develop gas cooperation active cooperation with Russia

France-Russia deal shows the way for forging anti-IS front

STATISTICS Ruble/Rupee dollar rates

Russian President Vladimir Putin’s talks with French leader Francois Hollande in Moscow, hailed by some as a breakthrough, focused on intensifying counter-IS cooperation in Syria, without being part of a US-led coalition ALEXEY TIMOFEYCHEV RIBR

Stock Market Index

Oil prices per barrel, in $US EPA/VOSTOCK-PHOTO

he visit of French President Francois Hollande to Moscow last week marked the end of a diplomatic tour that he set out on, after militants from the Islamic State carried out terrorist attacks in Paris two weeks ago. Before his meeting with Hollande, Putin discussed the need to intensify the fight against IS terrorists with the leaders of the US, Britain, Germany and Italy. However, after the meeting, which lasted several hours, it turned out that a single, broad coalition to combat IS, which would include the US and Russia, would not happen. At a press conference after talks in the Kremlin, Putin said that Russia’s partners acting against IS in the Middle East, and part of a coalition of several dozen countries led by the US – are not yet ready for this kind of initiative. These words were not met with any objections from his French counterpart. There was also no agreement on another key issue in the way of forming a coalition – the fate of Syrian President Bashar al-Assad. Hollande said that there is no place for Assad in the future of Syria, and Putin stressed that the fate of the Syrian president is in the hands of the people of Syria. At the same time, despite the differences, many, including the Head of the State Duma Foreign Affairs Committee Alexey Pushkov, have called this meeting a “breakthrough”. At the meeting, the presidents agreed, according to Hollande, “to intensify exchange of intelligence information and focus our attacks on IS and terrorist groups”. As the Russian leader said, it is necessary to avoid attacking areas where there are formations

Taking on common enemy: Russian President Vladimir Putin and French President Francois Hollande held talks in Moscow to combat terrorism in Syria.

present that are ready to fight against terrorists. Pushkov, speaking on the TV channel Russia 24, interpreted this agreement as “two great powers of the modern world, two members of the UN Security Council, starting a common, and not separate, fight against the terrorist organisation Islamic State”. Experts, however, are more cautious. Arrangements for coordination of operations against IS between France and Russia – “are

a big deal”, says Dmitry Danilov, head of the Department for European Security, Institute of Europe, RAS. The agreement between Paris and Moscow shows the path to other participants in the battle against IS – “that path, which one can follow, by developing cooperation with Russia”. In this case, the arrangements made between Hollande and Putin, to coordinate their anti-terrorism efforts, can become a kind of model for other

states that are also part of the American coalition. The visit of the French president may also play a positive role for Moscow’s relations with the Euro-Atlantic community. France, says Danilov, could act as a kind of a “balance beam”. In the light of its new relations with Moscow on the Syrian conflict, Paris can exercise influence on the positions of other members of NATO and the EU, he said.

Russia’s GDP (annual %)

Russia moves up in WB business ranking Propelled by new initiatives, Russia has jumped 10 places to 51 in World Bank’s Ease of Doing Business ALEXEY LOSSAN RIBR

became known as the so-called “hundred steps.” According to the president’s plan, by 2015 Russia was to meet the intermediate goal of 50th place, just one place higher than this year’s ranking. “In the last five years Russia has risen by more than 60 places,” said Konstantin Korischenko, deputy director of the department of capital markets and financial engineering at Moscow’s RANEPA institute and former deputy chairman of the Central Bank. “This is essentially in line with the 2015 objective of entering the ranking’s Top-50,” he said. Russia also leads the other members of the BRICS group of large, emerging economies by a wide margin: Brazil (116), India (130), China (84), and South Africa (73).

Ruble rate projection

ALYONA REPKINA

ussia has bounded ahead in the World Bank’s coveted global ranking of business environments, granting a muchneeded vote of confidence to its troubled economy as the country struggles to emerge from a festering recession. The ranking, called Doing Business, measures the relative ease or difficulty of starting a small or medium sized business across 189 countries. This year, defying its detractors, Russia has leaped 10 places to 51st, ahead of European economies Greece, Serbia and Luxembourg.

Singapore topped the list, and the United States landed in the 7th position. The World Bank said that Russia advanced in the ranking after making improvements in areas like access to credit, new businesses registration and access to electricity in farflung areas. Sylvie Bossoutrot, Program Leader for the World Bank in Russia, said the result “confirms the positive tendency of the past four years and that Russia maintained a strong reform momentum,” in a statement accompanying the report. “This year Russia scored amongst top 10 best performers globally in registering property and enforcing contracts,” Bossoutrot

said. Russia has been streamlining licensing procedures and reducing the number of state inspections, World Bank researchers said. “Russia reduced the time required to obtain an electricity connection by eliminating redundant inspections,” said the World Bank report. Russian President Vladimir Putin has made raising the country’s standing in the Doing Business ranking a key national priority, part of his overarching efforts to use the metric as an objective set of parameters for measuring the effectiveness of business reforms. In May 2012, Putin signed a decree ordering bureaucrats to work towards improving Russia’s position in the ranking from 120th to 20th place by 2018, a transition that

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SERGEI MARKEDONOV Expert

he unexpected shooting of the Russian aircraft by the Turkish Air Force and the ensuing controversy will be a difficult test for bilateral relations between Moscow and Ankara. Until recently, politicians and experts viewed the two countries as an example of success in improving relations between the former historical enemies. However, it would be wrong to consider the current problems as something which arose suddenly. Prominent Turkish expert Bulent Aras described Turkish-Russian relations as a “competitive partnership.” Indeed, the views of Moscow and Ankara did not coincide on many political subjects. It concerned both the Nagorno-Karabakh conflict and Georgia, whose territorial integrity was not questioned by Turkish politi-

cians. For a long time, the two countries, however, were able to narrow down their differences through the development of mutually beneficial economic relations. It seemed that pragmatism would continue to overshadow the contradictions and debate on political subjects. The relationship of Turkey’s longtime leader Recep Tayyip Erdogan with the US and the European Union left much to be desired. Ankara was not happy about Washington’s relations with the Kurdish movements in the Middle East, while the movement of the Turkish Republic toward European integration did not meet much enthusiasm on the part of Brussels. In addition, the “Kurdish card” in Turkey also provoked debate within the EU about the advisability of bringing Turkey into the fold.

In short, Russia and Turkey agreed to disagree on some issues, but did not cross the “red lines” and question the need for increased economic cooperation. It was evident from the preparation for the implementation of the Turkish Stream energy project, designed to reduce the dependence of the Russian Federation on the European consumers of Russian gas. However, it is not in 2015 that the logic of an “agreement to disagree” began to break down. The origins should be sought in the events of 2011, when the so-called Arab Spring came to the Middle East. If Moscow saw this event as a dangerous challenge associated with the collapse of the secular state, the strengthening of Islamic fundamentalism and concerns about its export to the post-Soviet states and Russia itself, then Turkey saw it as a chance to return to the region, which Ankara for many years did not see as its priority. Hence, the Turkish support for the leader of Egypt’s Muslim Brotherhood, Mohamed Morsi, a sharp turn to the criticism of Israel and political support of Palestine, and the struggle against the regime of Bashar al-Assad. Ankara actually made a claim for the Middle East as its “near abroad.” As a result, the two Eurasian giants formed different political “optics.” In Syria, Moscow sees Islamic State and the collapse of the secular state as the main threat, while Ankara fears the strengthening of the positions of the

Kurds and the Alawites, and the defeat of its “clients” who are interested in the strengthening of the Turkish influence in the region. No doubt, the aircraft incident has jeopardised relations between the two Eurasian giants. Emotions have reached the highest point both in Ankara and Moscow. But, first, the parties already have some experience of getting out of the complex and almost deadlock situations. Secondly, neither side wants to help third forces by weakening each other. Third, the same Turkey is well aware that in spite of its dislike for Assad, the destabilisation in the neighboring country may boomerang on Turkish society itself. There is radical Islamist sentiment inside, whose carriers are ready to fight against Erdogan, regardless of his relations with Russia. Even by spoiling them, he will not get forgiveness and support from these people. All this gives us a faint hope that the parties will find some modus vivendi in the new challenging environment. S.Markedonov is an assistant professor of the Foreign Regional Studies and Foreign Policy Department of the Russian State University for the Humanities.

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IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

B |U |S |I |N |E |S |S WEDNESDAY DECEMBER 2, 2015

PROJECTIONS: Economy may expand by 0.3% next year and 1.8 % in 2017 if oil averages $65 per barrel: S&P ratings agency

Russia, India to hold joint Indra naval drills December 7-12

The recovery remains fragile and will largely depend on the price of crude oil, say analysts. ALEXEY SERGEEV RIBR

After a punishing year in which plummeting energy prices unleashed a grinding recession, signs finally began to emerge late in 2015 that the worst may be over for the suffering Russian economy. “It now appears that Russia’s recession may have bottomed” during the second quarter, analysts at Moscow’s UralSib investment house wrote in a note to investors. “Nonetheless,” the analysts wrote, “the recovery is fragile.” To be sure, Russia is set to see its first annual economic contraction this year since 2009, in a decrease the World Bank has estimated at 3.8 per cent for the year. For Russia, whether growth will resume in 2016 depends largely on the price of crude oil, the country’s key export. As the world’s biggest producer of energy in combined oil and gas, Russia was hammered when oil collapsed by 60 per cent from June 2014 to January 2015, causing currency, the ruble, to enter a tailspin as the Russian Central Bank abandoned its previous policy of supporting the currency. According to an estimate by the American ratings agency S&P, Russian economic activity will be essentially flat in 2016 if oil prices stay roughly where they currently are, at around $55. Russia’s economy may expand by 0.3 per cent next year and by and 1.8 per cent in 2017 if oil averages $65 per barrel. Meanwhile, falling incomes have pushed poverty levels skyward, and consumer spending took a bit hit, falling 10.4 per cent in September. But the decline in energy revenues

Russian ships will arrive at the Visakhapatnam port in Andhra Pradesh on December 6 to take part in Indra joint naval maneuvers, a source close to India’s Ministry of Defence told TASS. “The exercise will be held from December 7 to 12 this year; the welcoming ceremony for the detachment of the Russian Navy ships is planned for December 6,” he said. The Russian participation will include a missile cruiser, a destroyer, a sea tanker, a tugboat and two naval helicopters. The Indian contingent will include a multipurpose frigate, a destroyer, an antisubmarine plane, a Coast Guard plane, two training planes and a copter.

Rosneft to offer $2.4 bn for acquiring 49% stake in Essar Oil Russian energy giant Rosneft is offering around $2.4 billion for a 49% stake in Essar Oil, India’s second largest reﬁner, and will supply 100 million tonnes of oil to the latter for the next 10 years, Indian media reported last week. Rosneft is expected to offer just under Rs 200 per share. “The pricing is likely between Rs 190 and Rs 195 a share,” said a source who did not want to be named. This values the stake sale at $2.4-2.5 billion. RIBR

IFFI: Ace Russian director Mikhalkov gets Lifetime Award

has also pushed state policymakers to seek new avenues for growth in areas beyond raw materials exports, in areas as diverse as pharmaceuticals manufacturing, chemicals production, car-making and agriculture. Cheaper ruble: Harbinger of growth? The Russian Central Bank’s decision to let the ruble lose almost half of its value against the dollar over the past year has had a deep impact on the Russian economy, with implications that have rippled through a variety of sectors. On the positive side, one key result has been to boost Russian exporters, slashing costs while allowing Russian products to compete favourably in pricing with foreign competitors. Indeed, production costs have fallen by almost 50 per cent inside Russia, helping the producers aggressively lower their wholesale prices. The cheaper ruble has created a boom in agricultural exports to China. Russian sales of foodstuff to China rose 33 per cent in the second quarter of the year. Overall, trade between Russia and China is still lower this year, primarily due to the depressed value of Russia’s energy exports. Russian agriculture has also got some backhanded assistance from Russia’s sanctions war with Europe. Having blocked European food imports over the political standoff with Ukraine, Russian farmers are now being tapped to fill the breach. During the first nine months of the year, production of meat grew by 13.9 percent, the cheese output rose by 22 percent and poultry output increased 10 percent. Meanwhile, global automakers

For now, the US and EU sanctions are mainly targeted at the so-called “offshore elite”.

Double-digit inﬂation poses risk to recovery One major risk to Russia’s econmic recovery is the persistent inflation, which has eaten away at average Russians’ spending power. The Russian Central Bank held interest rates steady at 11 percent at a meeting on October 30, citing concerns over double-digit inflation, which hung at 15.6 percent as of midOctober. “We believe that inflation will decelerate more steeply into the

year end, and expect it to reach 12.5 percent by the end of the year,” UralSib analyst Olga Sterina wrote in a note to investors in November. Controlling inflation would allow the Russian Central Bank to begin cutting interest rates to spur the economy and promote lending. Sterina said she expected the bank to cut the interest rate by half-a-percentage point in mid-December.

New pharma regime: Win-win for foreign giants with localised production facilities across Russia VYACHESLAV PROKOFIEV / TASS

Eminent Russian director Nikita Mikhalkov received the Lifetime Achievement Award for his contribution to world cinema during the IFFI closing ceremonies held in Goa, on November 30. The award is accompanied by a cash prize of one million rupees (about $15,000). No Russian director has ever been a recipient of this award. Mikhalkov readily admitted that Indian cinema has greatly inﬂuenced his work. RIBR

After tough times, Russia’s growth prospects look brighter for 2016

MAXIM VORKUNKOV / TASS

NEWS

The import substitution policy will encourage foreign pharma companies to localise faster. KIRA EGOROVA RIBR

hen Prime Minister Dmitry Medvedev tasked the government with import substitution in the field of pharmaceutical production in May 2015, foreign companies were worried. Russia’s pharmaceutical market, worth $19 billion a year, is a fraction of Europe’s, where the top five EU economies have a $157 billion turnover, and that of the US, valued at $377 billion, according to Pharmaceutical Commerce magazine. But its loss would have been a blow to western drugs companies at a time when the global economic crisis is squeezing

profits. However, import substitution will affect only those foreign companies which remain net exporters of drugs; for those with a manufacturing presence in Russia it may be beneficial. “For localised foreigners, this is an opportunity to quickly recover the investments they have made here, while for those with no factories – this is an incentive to localise faster,” says Victor Dmitriyev, chief executive of the Association of Russian Pharmaceutical Manufacturers (ARPM). Net importers will lose a significant chunk of the market. The commercial part of the market is not inevitably affected by import substitution – private companies can still import foreign drugs in volume. However, the public sector will un-

dergo significant changes. Today, the share of domestic drugs on the List of Vital and Essential Medicines amounts to 60 per cent. By 2018, the authorities plan to increase this share to 90 per cent, reducing imports by 30 per cent. Pharma giants such as AngloSwedish firm AstraZeneca, French Sanofi, Swiss Novartis and Danish Novo Nordisk have production facilities across Russia. In 2014, US company Abbott made one of the largest transactions in the history of Russia’s pharmaceutical business by acquiring the country’s second largest drug manufacturer, Veropharm, for 16.7 billion roubles ($495 million, at 2014 exchange rates). Abbott is still optimistic about its prospects in Russia. “We see our investment in Veropharm as an opportunity to participate in the development

of the Russian pharmaceutical industry,” Irina Gushchina, Abbott’s head of public relations in Russia, told RIBR. According to Gushchina, the company plans to expand its research capabilities and further develop Veropharm’s production base in gynaecology, neu-

Anglo-Swedish AstraZeneca, French Sanoﬁ, Swiss Novartis and Danish Novo Nordisk have production facilities across Russia. rology, gastroenterology and oncology, where the demand for innovative products is particularly high. “In the strategy of import substitution, we see additional opportunities for business expansion in Russia as a

scrambled their plans for Russia as domestic demand fell, reworking their strategies towards exporting cars made in Russia to take advantage of the weaker currency. Reuters reported in September that Volkswagen, Ford, Nissan and Renault were all considering increasing exports from Russia. Nevertheless, Volkswagen opened a 250-million-euro engine manufacturing plant in Russia’s Kaluga region in September with a capacity of 150,000 engines a year, while America’s Ford produced its first car with an engine made in Russia in October.

result of co-operation with Russian companies,” said Thibault CrosnierLeconte, chief executive of Sanofi Pasteur (the vaccine division of Sanofi) in Russia. The French manufacturer plans to launch a popular vaccine for children at Russian company Nanolek’s factory in St Petersburg. The plant will produce up to 10 million doses annually, which will fully satisfy the demand for this vaccine in Russia, said Crosnier-Leconte. Sanofi Pasteur plans to start the localisation process of its vaccine production in 2016, with the technology transfer expected to be completed by 2019. However, some international firms – including US drug company Pfizer, Germany’s Bayer and Belgium’s UCB Pharma – do not have factories in Russia and are wary of the idea. But there is a way out for these companies: they can find local partners and partly move their production to their partners’ facilities. “Bayer is pursuing its localisation strategy through selective partnerships with Russian producers focused on full-cycle production,” said Niels Hessmann, Bayer’s chief executive in Russia.

India’s state-owned energy giant ONGC will get a 15% stake in one of the largest mining projects in Eastern Siberia – Vankor. In 2014, the Vankor field produced around 22 million tonnes of oil – 4.2% of total production in Russia. “This is a good project for a foreign investor, because there is great potential to increase production volumes. In addition, there are no problems when it comes to the sale of crude oil via the East Siberia – Pacific Ocean (ESPO) pipeline. Through this pipeline, oil can be delivered to the terminal in Kozmino Port, and from there, by sea to India and other Asia-Pacific Region countries,” said Gregory Birg at the Investkafe Analytical Agency.

PRODUCTION “This field has very low extraction operations costs – only $2.70 per barrel. The reasons for this are – modern technology, inclined wells, and light oil, which is easily extracted under pressure,” said Mikhail Krutikhin, partner at the RusEnergy Consulting Agency.

Recoverable reserves (as of the beginning of 2015) 476 million tonnes of oil

173 billion cubic meters of gas

VANKOR

In April 2015, the 100 millionth tonne of oil was extracted at Vankor.

LATEST TECHNOLOGIES In this field, the most advanced technologies are used at all stages – drilling, extraction, pre-processing, and transportation of oil. The process of oil extraction is fully automated. About 90% of the equipment used and services provided at Vankor are of Russian origin.

INFRASTRUCTURE

60,000 tonnes of oil per day is produced at Vankor – this is one of the highest oil extraction ratios in the industry.

More than 400 km of intra-field pipelines

416 wells operate in this field.

120 km of roads

By 2020, Vankor should achieve an annual production of over 30 million tons of oil, and more than 8 billion cubic meters of gas.

Over 1400 km of electric power lines

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

O |P |I |N |I |O |N WEDNESDAY DECEMBER 2, 2015

THE BIG PICTURE

THE LONG VIEW

Kindling hope: Is the Russian economy bouncing back?

IS threat: Forging a global front against the common enemy IORSH

GEORGY BOVT Foreign policy analyst

DMITRY DOKUCHAEV Expert

t a meeting with government ministers devoted to the discussion of economic issues, held in November, Russian President Vladimir Putin announced that the Russian economy has achieved “the point of equilibrium and balance.” Thus, the Russian leader, willingly or not, waded into the discussions that have been taking place in the last few weeks in business circles – both in Russia and in other countries. The question that is engaging everyone is whether the domestic economy has reached its bottom, and if it is now appropriate to talk about the beginning of its slow, but nevertheless upward rebound. We can say that during this time, the

alarming rhetoric of Russian authorities, regarding the crisis through which our country was going, has started being replaced by rather optimistic statements. The reason for this was the latest data released by the Ministry of Economic Development (MED), according to which in September, Russia’s GDP, taking into account seasonal factors, increased by 0.3 per cent compared to August. Such a monthly increase – even if it is just marginally higher than zero – had not been observed for a long time. This was made possible by positive dynamics in the manufacturing sector. This optimism of colleagues from the Ministry of Economic Development was shared by Deputy Minister of

Finance Maxim Oreshkin. Just a few days ago, from the rostrum of the representative forum, Oreshkin confidently declared that the economic crisis in Russia had been left behind, as shown by some investment inflow into the national economy, which had been recorded in the third quarter of 2015. The fact is that, in a little more than a year since the start of the crisis, the Russian economy, even though it has not yet experienced true growth, has to some extent adapted to the new reality of low oil prices (around $50 per barrel), the significant decline of the ruble (60-65 per dollar), and the closing of Western markets to borrowers. Little by little, the food production sector began to play the role of an economic “locomotive,” having been given new focus and emphasis by the food import embargo implemented in August 2014. As a result, during this

period, the production of cheese increased by almost 30 per cent, meat by 12-13 per cent, and fish by 6-7 per cent. In short, not all sectors of the domestic economy find themselves on the “minus” side. All Russians have become tired during the past year and a half of the crisis, watching the depreciation of the ruble, the constantly rising prices on store shelves, the difficulties encountered in finding work, and the level of wages and incomes. Thus, in this sense, the announcements made by high-ranking officials in the economic field can be understood – they are trying, with their statements, to inject a dose of optimism into the population, and into the markets, and into businesses, both big and small. Dmitry Dokuchaev is a journalist and columnist. The article was ﬁrst published at Russia Direct.

ENERGY GAMES

New geopolitics of oil: Russia looks East, Riyadh targets Europe, IS joins the fray IRINA MIRONOVA Expert

he changing structure of the global oil trade — which includes a new role for Saudi Arabia and the rise of non-state actors such as ISIS — has important implications for the world’s biggest producer of energy: Russia. Russia’s top energy companies, already grappling with the consequences of lower global oil prices over the past 18 months, now face additional challenges brought on by the shifting structure of the global oil trade. Most importantly, Saudi Arabia’s move to start shipping more crude oil to Europe is forcing Russia to accelerate its energy pivot to Asia. What we are witnessing is, firstly, a change in the geography of the oil trade. Russia is turning to the East, winning market share from the Middle East. At the same time, Saudi Arabia is replacing Russia in the European gas market.

The factors that explain this development are rooted in the security of supply considerations of Asian oil importers, who have a historically high degree of dependence on Middle Eastern supplies and use Russian supplies as a way to diversify. Moreover, the deteriorating relations between Russia and the West have had their impact on this process, with decreased participation by Russian companies in the European refinery business, as well as the smaller degree of involvement of international energy companies in Russia’s modernising refinery sector. As a result of increased tensions over Ukraine, European reprocessing plants have cut their purchases of Russian crude and started to replace it with oil from Saudi Arabia, setting the stage for a titanic struggle for global market share between two of the world’s most important oil suppliers.

Holding on to the market share is vital because the space for crude suppliers is tightening. By contrast, the market for refined oil products (like gasoline and kerosene) continues to expand and globalise. Meanwhile, the nature of the oil trade is changing as well. It is not crude oil, but refined oil products (such as gasoline or kerosene) that have taken on a more central meaning for the globalization of trade flows in the medium-term. Therefore, major crude players like Saudi Arabia and Russia are actually focusing on developing their own refinery capacities and taking over their positions in the products markets. Importantly, the end-markets for their output are located in Asia rather than the stagnating European market. The EU is the second largest producer of oil products after the US. Recent reports show that light Saudi crude is a new favorite for energy importers in Europe, threatening the traditionally Russian-dominated market. Low prices, in addition to strained relations between Russia and the West, are factors that have led companies like Shell and Total to make the switch.

These moves are aggressive enough to have caused sufficient concern among the Russian leadership. So long as Saudi Arabia keeps prices sufficiently low by means of discounts, high production, or both, the Russian market share in Europe will continue to be threatened. Meanwhile, there is another complicating factor: the emergence of the Islamic State of Iraq and Greater Syria (ISIS) has complicated the notion that the geopolitics of energy are traditionally set by sovereign states. ISIS enjoys a crude output of 34,000-40,000 barrels per day, banking an estimated $1.5 million per day. Reportedly some of this oil is sold and consumed by both rebels fighting Syria’s al-Assad government and the al-Assad government itself. The increased production from fields controlled by ISIS indeed signifies the birth of a new geopolitics of oil in which non-state actors have increasing importance. As a result, the notions of sovereignty over national resources, traditional trade barriers associated with national borders and trade legislations, and energy diplomacy are all taking on a very different meaning.

he series of terrorist attacks in France has forced Russia and the West to recognise an undeniable fact that we have a common enemy: international terrorism, represented first and foremost by the Islamic State. This enemy must be crushed with common efforts, while all other disagreements must be given secondary or even tertiary importance. After recognising that a terrorist act downed the A321 airliner, the West gave President Vladimir Putin the right to affirm that, “Russia’s business in Syria is correct.” Revenge for the 224 passengers has become a matter of national principle. “The murder of our people in Sinai is among the bloodiest crimes in terms of number of victims. This will remain with us forever. But it will not prevent us from finding and punishing the criminals,” Putin stated, citing Article 51 of the UN Charter on a country’s right to self-defence. For information leading to the capture or death of the terrorists responsible for the tragedy Russia will give an unprecedented sum of $50 million. Although Putin was careful in using the words “revenge,” “chastise” and “punish” in reference to the terrorists, his press secretary Dmitri Peskov was more blunt, saying that the special services had received an order to “destroy” everyone involved in the terrorist act. That is, without a trial. Moreover, by citing Article 51 and by using a hard tone, Putin made Russians understand that the terrorists’ “punishment” will be similar to the actions of the Israeli special services, which hunted down the Palestinian terrorists who murdered the Israeli athletes during the 1972 Olympics in Munich and killed them without any judicial hassle. What consequences can Moscow’s official recognition of the terrorist act have? Will this become a reason to immediately cut air communication with other countries (as it was done with Egypt) that pose a significant terrorist threat? Several Russian parliamentarians have voiced such thoughts. But in my opinion, this extreme measure will be implemented only in the case of a more dangerous escalation of terrorism. For now Russian aviation is suggesting to increase air security on flights to 47 countries, including some EU countries and the US. Concerning Syria, the expected and already announced increase of the number of strikes on terrorists will not lead to a Russian ground operation in the country. A single antiterrorist front will also not be formed,

for now. Yet, coordination between Moscow and the West after the terrorist acts in Paris and the G20 Summit in Turkey, where the subject matter was discussed in a new context, will doubtlessly intensify. Relations between Russia and the West in light of the new recognised threat are obviously better today than they were a year ago. Thus, Moscow will surely increase the number of air strikes on the IS positions but will refrain from striking forces belonging to the Free Syrian Army, which the West considers a “moderate opposition.” The West has still not given Moscow the list of objects controlled by the so-called “moderate” opposition so that Russia would not bomb them. However, closer coordination between the sides concerning those who certainly should be bombed has already begun. The fact that immediately after Putin’s statement the Russian Air Force launched an attack on what is basically the IS’s capital, Raqqa, is proof of Moscow’s intent. With respect to the ground opera-

This enemy must be crushed with common efforts, while all other disagreements must be given secondary or even tertiary importance. tion, even though experts believe that a full victory over the IS will be impossible without it and neither Assad’s nor the Kurdish forces are enough, the issue is much more complex. And more ominous. Islamic State, which gives significant importance to the early Islamic surahs in its propaganda and ideology, actually longs for a “decisive and final” ground battle with the “forces of Rome,” that is, the West and the Christian world as a whole. The battle, according to such prophecies, must take place near the Syrian town of Dabik (now controlled by IS), which is not far from Raqqa. If this interpretation of IS’s intentions is true, then the Paris terror and the downing of the Russian plane are provocations, “invitations to a battle” from the fanatics. If the invitation goes unanswered, there will be more “invitations.” This confirms that the fanatics and obscurantists have posed a very serious challenge for our civilisation. And for now our disagreements on things that are profoundly secondary are preventing us from forming an answer to the challenge. The author is a political analyst and member of the Council on Foreign and Defense Policy.

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

F |E |A |T |U |R |E WEDNESDAY DECEMBER 2, 2015

INTERVIEW

CINEMA: Release of ‘Tamasha’ in Russia will help rediscover each other’s culture, create a new market

‘Eurasian Oscars’ may be possible by 2017

Russian Film Days reignite old Bollywood bonding

Russia and India are negotiating an agreement on ehancing cooperation in the field of cinema

The week of Russian cinema on Nov 16-19 in Mumbai focused on co-production of films and joint ventures

ALESSANDRO BELLI Specially for RIBR

ead of the Department of Cinematography of the Ministry of Culture of Russia Vyacheslav Telnov told RIBR about the prospects of Russian-Indian cooperation in cinema and the upcoming Year of cinema in Russia.

ALEXANDRA KATZ RIBR

Russian actresses at the Russian Film Days in Mumbai.

‘Viy’, a 2014 movie by Oleg Stepchenko starring Jason Flemyng, can become the ﬁrst Indo-Russian coproduction in modern times. plus screens, said Sarfaraz Alam, president of Indian Film Festivals in Russia and CIS. “I had a vision to recreate a market for Bollywood films in Russia and have chosen a film with Ranbir Kapoor who is Raj Kapoor’s grandson,” Alam told RIBR. The governments of India and

Russia are also looking to revive cinematic collaboration and have started putting plans on paper. “The potential for cooperation between our countries exists, we need to meet more often and discuss such possibilities,” said Vyacheslav Telnov, Head of Cinematography at the Russian Culture Ministry. “Co-production will attract additional investments for large-scale movies and will widen distribution prospects,” he said. A special working group within the India Russia Intergovernmental Commission for Trade, Economic, Scientific & Cultural Cooperation (IRIGC-TEC) has drafted an agreement for co-production of films. When signed it should take cooperation to a new level, Telnov added. “It will be of support for the film industry, if such a treaty is signed,” said Kulmeet Makkar, CEO of the Indian

Film &Television Producers Guild. With 90 million people having access to film theatres, Russia is an attractive market for Indian films considering that foreign movies dominate Russia considering that foreign movies dominate the Russian market. ‘Viy’, a 2014 movie by Oleg Stepchenko starring Jason Flemyng, could become the first co-production between Russia and India in modern times. “We have been discussing coproduction with Indian partners for some time,” Stepchenko, who is in Mumbai for Film days, told RIR. The second part of ‘Viy’, a fantasy-horror film based on an 1835 Nikolai Gogol short story, is being filmed in China. The third part will be shot in India. Investments for the third part of the movie will be equally shared with Indian, and possibly Chinese producers.

Russians have many things in common with Indians, but drinking tea is an undying bond RIBR

hy do you need to have so many weird teas? Isn’t black enough? asked my Australian friend, in an attempt to figure out Russia’s obsession with tea. We love our tea in Russia, and have done so for a long time. It started with sbiten — a hot herbs and honey drink — and then slowly moved to real tea, with

the famous samovar used to facilitate the drinking and creating a wonderful backdrop for paintings. Today, there is indeed a huge variety of tea available in restaurants, cafes and homes in Russia — black, green, red, fruity, herby, and with mixes as sophisticated as a cocktail in a swanky bar. We (or at least I) love it because it can keep you warm through cold weather and it’s a great way to social-

ise and eat candy. When I was a kid, tea options were much more limited. It was all black, although herbs and berries would still be added when available. Black tea was (and still is) drunk with lemon and sugar — either dissolved in the cup or “vprikusku” — biting on sugar while drinking tea. A variety of jams would also be served. My brother was particularly fond of sweet tea, and as a kid said that “grandpa’s tea is the best!” A short investigation into “Grandpa’s tea” showed the secret to making the best tea was three large spoons of sugar in

each cup. The recipe for making tea in the book naturally involves black tea. It explains that tea comes from Georgia, Azerbaijan and Krasnodar, and that Soviet tea is “always and quite natural.” It also explains something I did’t think about, which is that there was green tea in the Soviet Union, but it’s only drunk in the Russian Far East and what are today the republics of Central Asia. “During the war we would use dried carrots and berry leaves to make ‘tea,’” my granny said. “After the war, we drank a lot of tea — a cup of tea and a salami sandwich was a meal in itself.

What other components will the agreement comprise?

Taxation. Exchange of Russian and Indian cinema weeks. It is about creating the conditions for fruitful bilateral cooperation in the field of cinema. Such documents are already in force with China and other countries. An idea of creating film awards for each one of those countries was announced at the BRICS summit. Are these plans still in force? It was about creating the Eurasian Academy, which would be similar to the “Oscars” - with the participation of India, Russia and China. Every year we plan to award a prize form this Cinema Academy. However, it is difficult to say which year we will be starting from. This can be done, for example, at the Moscow International Film Festival and the biggest reviews in India and China. When can the Eurasian Academy be created? We expect to hold a presentation of the Eurasian Academy Award at this year’s Moscow International Film Festival. I hope that in 2017 it will already be in in operation. At the moment, we are expecting proposals from India and China, and who will be the founders on their sides. On the Russian side, it is the National Academy of Motion Picture Arts and Sciences.

ARINA MOSTOVSHIKOVA

well as the release Indian latest films there”. The release of ‘Tamasha’ in Russia will see Bollywood resume exports to Russia. The film will release in Russia, CIS and Baltic countries in 300

Vodka? It’s always tea time in Russia ANNA KHARZEEVA

How do you assess the prospects of RussiaIndian cooperation in filmmaking? Of course, we would love to collaborate with Indian filmmakers. There are a lot of plans for this, but until now they have been reduced to the requirement to prepare an intergovernmental agreement in the field of cinema, which will affect joint cinema production, and mutual film distribution. We must create conditions for producers and distributors, so one of the purposes of my trip is to convey to Indian filmmakers that Russia is ready to cooperate. The work on the agreement has already begun. The project is being considered by our Indian colleagues. However, it may take about a year to get approved.

ARINA MOSTOVSHIKOVA

ollywood bonding between India and Russia, which harks back to the heday of Raj Kapoor, has been reignited during Russian Film Days in Mumbai, which showcased a rare collection of classic and contemporary Russian films. The event, organised by Russia’s National Rights Holders Support Fund and Filmmakers’ Union, is a first attempt by Russian authorities and film industry pioneers to revive lost cinematic bonds between the two countries. Russian Film Days will become an annual event, said Maria Lemesheva, editor-in-chief of The Hollywood Reporter Russia, and head of the Russian delegation. Fifteen Russian films were screened at the legendary Liberty Cinema, a 1,200- seater single screen movie theatre in south Mumbai. Officials from the Ministry of Culture, film directors, producers and actors, who arrived from Russia, have been discussing collaboration opportunities with Bollywood representatives. Mohit Choudhary, who is currently marketing ‘Tamasha’, a much awaited film directed by Imtiaz Ali and starring Ranbir Kapoor and Deepika Padukone, said both actors would be keen to work in Russia. “We are looking to release ‘Tamasha’ in Russia and look forward to being there with Ranbir and Deepika,” Mohit Choudhary told RIR. “We need to rediscover each other’s culture and bonds, we need to see what kind of business opportunities are there in Russia for co-production as

VYACHESLAV TELNOV

Vyacheslav Telnov addressing an event during the week of Russian cinema in Mumbai.

The most sought after tea was Indian, but it wasn’t easy to come by.” Tea was always in the provision packages given out at work on special occasions, although it wasn’t always the Indian ‘3 Elephants’ brand. Before the collapse of the Soviet Union, Indian tea was the sole foreign tea available in the Russian market. However, after the break-up to the Soviet Union, tea from countries such as Sri Lanka, Kenya and Vietnam started coming to the Russian market, and have won the loyalty of many Russians over the years. In the villages, they would drink tea from a samovar. It took hours; they’d drink 10 litres between one family, using cups and saucers, pouring tea into saucers and drinking straight from

there. When I was growing up, we did have what we called “tea mushroom,” which is a combination of yeast and bacteria mixed with sweet tea. It looked like flat jelly fish floating in a big jar with tea. Friends who came over didn’t always know what it was, but would always get a piece of our mushroom – the granny was very generous – with instructions on how to use it. “Every family I know had tea mushroom. We believed it could cure all possible diseases. But then one day it just disappeared – I don’t remember when and don’t know why!” laments Granny. We Russians may not drink tea mushroom or use samovars anymore, but one thing is here to stay — the undying love for tea.

Moscow 2016: What’s on menu? 12 .12. 2015 11.01.2016

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The Journey to Christmas Festival Thirty-six festival platforms will appear on the city map. Each will have rows of market stands, open stages and street theaters.

The Night at the Museum Festival More than 250 cultural institutions will remain open late into the night: museums, galleries and other institutions dedicated to the arts.

A Moscow Summer. The Preserves Festival The city will be decorated with art installations, and festival-goers will have their choice of jams and fruity sweets to purchase in many tents.

The Krug Sveta Festival A grand lighting show: light designers and 2D and 3D graphics professionals will use the city’s architecture as screens to project multimedia and light installations.

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Victory Day Surveys show that the day Russia commemorates victory over Nazi Germany is the most respected Russian holiday. The main event is the famous military parade on Red Square.

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The Moscow Spring Festival Theatrical performances, exhibitions and concerts will take place throughout the city. The festival will commemorate the heroes of World War II.

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The World Ice Hockey Championship The 80th championship tournament will be held in Moscow and St. Petersburg, with 16 national teams competing.

Moscow City Day Moscow’s birthday. The city turns 869 years old. Concerts, shows and theatrical performances will be staged on the city’s central squares, streets, boulevards, waterfronts and parks.

The Spasskaya Tower International Military-Musical Festival Russian and foreign military bands, folklore groups and honor guard units will stage performances at the Red Square.