Russia and India Business Report by Russia Beyond

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WEDNESDAY DECEMBER 17, 2014

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

DIPLOMACY: Focus on correcting imbalances, signed pacts encompass diverse areas, including oil and gas, nuclear energy, trade and investment, diamonds

New energy, new horizons: India-Russia ties set to move into a higher trajectory The Modi-Putin summit meeting has firmed up an ambitious vision for intensifying bilateral cooperation across the spectrum.

VLADIMIR PUTIN Russia’s President

“A consistent strengthening of cooperation with our friends in India is deﬁnitely a foreign policy priority for Russia. Our bilateral relations have already reached the level of a privileged strategic partnership and continue to develop dynamically.”

BORIS VOLKHONSKY Specially for RIBR

NARENDRA MODI India’s Prime Minister

“President Putin is the leader of a great nation with which we have a friendship of unmatched mutual conﬁdence, trust and good will. We have a strategic partnership that is incomparable in content.”

GETTY IMAGES/FOTOBANK

he annual Russia-India summit, which took place in New Delhi on December 11, was truly a milestone. Many of the announcements at the summit were made for the first time, pushing the Russia-India strategic partnership to a qualitatively new level. In all likelihood, it will only be possible to accurately evaluate the results of the meeting between Russian President Vladimir Putin and India’s Prime Minister Narendra Modi only after some time, when the plans that have been announced start being implemented. But it is already possible to say that the summit’s results really do open up fundamentally new perspectives for cooperation. And it is not just about the 20 documents that were signed. This is perhaps for the first time in recent years that the documents encompassed such a wide range of issues that they should eliminate some of the imbalances that have characterised bilateral cooperation in the recent past. It is no secret that bilateral relations between Russia and India, as in the past between the Soviet Union and India, have always been characterised by the highest degree of understanding. However, the main problem in relationships always was, and unfortunately remain to this day, is the underperforming economic component. The current bilateral trade of around $11 billion per annum clearly is far below potential. Compared to it, India and China, despite serious political problems, are managing bilateral trade of $70 billion, and the Russian-Chinese trade has almost reached $100 billion. Furthermore, the main feature of economic ties has always been military and technical cooperation. The summit confirmed that Russia and India will further develop their fruitful cooperation in this area, but it is necessary to consider several factors. Firstly, India has for a long time followed a policy of diversification in sourcing its armaments. In recent years, Russia has relinquished its leading position as the main supplier of arms to the US. Secondly, the new Modi government has announced the ‘Make

20 pacts Russia and India signed in diverse areas, including in the peaceful uses of nuclear energy.

10mn tonnes a year Russia’s Rosneft will supply to India’s Essar Group over 10-years. Supplies could begin as early as in 2015.

new nuclear reactors will be constructed in India with Russia’s help by 2035.

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advanced twin engine Kamov helicopters a year will be assembled in India.

A report on what binds diverse strategic ties between Moscow and Delhi and what stands in the way of a stronger partnership.

in India’ programme with its prime focus on indigenous manufacturing, which will create fundamentally new conditions, including in the militarytechnical sphere. This will change the nature of the relationships from the purchaser-consumer to partners in joint manufacturing. Finally, despite the importance of military-technical cooperation, it should not overshadow other areas where there is great potential, but the results are still below expectations. Probably, the main document which was accepted at the summit was the Joint Statement entitled “DruzhbaDosti: A Vision for Strengthening the Indian-Russian Partnership” over the next decade. This document shows that both sides intend to correct the imbalance in bilateral cooperation. The statement comprises 35 points, of which only one is directly related to the military-technical cooperation. Significantly, the main section of the statement is dedicated to energy technology. Last year, the first unit of the Kudankulam Nuclear Power Plant was successfully launched and reached its peak power generation in the summer of this year. At the summit, agreements were signed on the construction of the

third and fourth units. Furthermore, Russia and India agreed to the construction of another 12 nuclear power plants, and this is not a limit, as President Putin observed in an interview with the Indian media before his visit. Russia is prepared to build up to 25 nuclear power plants in India. An agreement was also signed by Russian oil giant Rosneft, which will deliver 10 million tonnes annually to India for 10 years. This, of course, will

economic relations is the geographical distance between the two countries and the lack of a common border. And here it is important to note that the joint statement clearly shows the readiness of both sides to make joint efforts to ensure that the long-cherished project of an international “North-South” transport corridor finally starts working fully. If this project is implemented, it will give a new impetus to the integration processes in the vast area covering

The joint statement shows the shared goal of scaling up economic and energy cooperation to the level of military-technical relations.

Druzhba-Dosti statement is deeply symbolic as it indicates the desire of India and Russia to intensify relations in all spheres.

not satisfy all the needs of India, but will allow hedge against situations like the one that occurred in 2012. Then, under pressure from the US, India was forced to reduce the oil imports from Iran, which led to higher prices not only for fuel, but also for all consumer products. One of the main barriers to the development of Russia-India trade and

Northern Eurasia, the Caucasus, the Middle East, and Central and South Asia. The same goals should also drive India to get full membership of the Shanghai Cooperation Organisation -Russia’s readiness to contribute to this was also confirmed in the statement. To list all the innovative aspects contained in the documents adopted

THE BIG PICTURE

How to lift bilateral ties, up and up PETR TOPYCHKANOV Foreign Policy Analyst

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at the summit is hardly possible - they really cover a wide range of topics, from innovative technology to cut diamonds. But I would like to note the profound symbolism of the summit and the documents that were signed, which is evident even in the wording. Symbolically, the two previous meetings between President Putin and Prime Minister Modi were in some way connected with the BRICS - the first meeting took place on the margins of the grouping of emerging powers in Brazil in July. This was followed by another meeting in November on the sidelines of the G20 summit in Brisbane, which was also linked to a meeting of the BRICS’ leaders. Thus, the Russia-India cooperation goes beyond the scope of bilateral relations, and is becoming one of the cornerstones on which the new world order is being established, which challenges any attempt to preserve a unipolar world order. The name of the joint vision document is also deeply symbolic: DruzhbaDosti. Even the English version of the statement uses these words from Russian and Hindi, which speaks about the two countries’ intention to build their relations in all spheres (from cut diamonds to financial payments) directly, not turning to third parties or paying attention to criticism which detractors are ready to make (or have made already).

resident Vladimir Putin’s 24hour visit to India was a success. This was clear from the impressive package of signed documents and an eventful schedule. But that is where the eulogies must end. To develop Russian-Indian cooperation further, the results of the visit need to be analysed in the clear light of day. Half of all the documents signed were MoUs. Of the 16 signed documents mentioned on the Kremlin website, only one is a contract and two are agreements. The contract is on the training of Indian soldiers in institutions under the Russian Ministry of Defence, while the agreements are between the Skolkovo Foundation and Electronics and Software Export Promotion Council of India, and ITAR-TASS and PTI. These practical arrangements were supplemented

by other agreements, not mentioned on the Kremlin website, in the fields of nuclear energy and diamonds. There was also a much-hyped deal between Rosneft and Essar to supply 10 million metric tons of oil a year for a period of up to a decade. The deal still represents just an agreement on the basic terms and conditions of a future contract. The package of signed documents due to different reasons bypassed military-technical cooperation, with the exception of the aforementioned contract and declarative statements. And the agenda included virtually no humanitarian issues, and no documents were signed or meetings held on cultural, scientific, educational, youth or religious cooperation On the whole, the visit was important and necessary for bilateral ties, but can’t be called sensational. There

are good and bad sides to this. On the one hand, given the already high level of cooperation between Russia and India, it is increasingly difficult to achieve breakthroughs in bilateral relations, of which there have been many in the past. Kudankulam NPP, the Su-30MKI multi-purpose fighter, the BrahMos missile, the aircraft carrier Vikramaditya, and the Arihant-class nuclear submarine are just some of the many success stories of the RussianIndian cooperation. Against this backdrop, the agreement to commence work on the second and third units of KNPP is remarkable. After India’s adoption in 2010 of the Civil Liability for Nuclear Damage Act, Russia was India’s first partner to reach an agreement to continue cooperation in the field of nuclear energy. Analysing President Putin’s visit, one cannot but agree with Alexander Kadakin, Russia’s ambassador to India, who said in February this year: “At present, relations between Russia and India are at the peak of their development.” There is a sense that, having reached the peak of bilateral relations, Russia and India may be about to embark on a descent. There are ample reasons for this. I will cite just two of them. First, the Russia-Indian relations are becoming ever more inertial and less innovative. This latest visit showed that Moscow and Delhi’s attention is focused in several areas: military-technical coopera-

tion, the peaceful atom, hydrocarbons, space, and now diamonds. Too little attention is being paid to other areas, where breakthroughs are more likely to occur. Second, the multichannel communication between Moscow and Delhi is showing signs of faltering. Why else would an Indian journalist have posed a question about potential military-technical collaboration between Russia and Pakistan directly to President Putin? This means that Russia has yet to assuage India’s fears over the statements made by Sergei Chemezov, CEO of Rostec Corporation, in summer about the alleged lifting of the embargo on arms supplies to Pakistan, followed by Russian Defence Minister General Sergei Shoigu’s visit to Islamabad in November. No arguments were put forward either publicly or privately that might have reassured the Indian authorities and the public. The growing trend for inertia in Russia-India relations and the breakdown in communication between the government and society in Russia and India could be overcome if these and other issues are given close attention. That is what Moscow and Delhi must do if they want to bring Russian-Indian cooperation up, not down.

Read the author’s blog in.rbth.com/south_ asian_outlook

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

E |C |O |N |O |M |Y WEDNESDAY DECEMBER 17, 2014

BUSINESS: Modi calls for direct trading between Alrosa, Indian companies; Putin invites Indian ﬁrms to manufacture in Russia

SHUTTERSTOCK/LEGION-MEDIA

Russian non-proﬁt partnership GLONASS Union and India’s Eirene Systems may set up a joint venture to develop and produce satellite navigation receivers for the ERA GLONASS emergency response system, with about $100 million investments, the union’s president Alexander Gurko told media. “We are joining efforts with our partners from India to develop, produce and implement joint solutions in navigation using our GLONASS technology and India’s own navigation system IRNSS. The sides may develop GLONASS/GPS/IRNSS receivers for markets of Russia, India and the third countries,” Gurko said. The establishment of a joint stock company GLONASS is being completed in Russia, and it will start operations in January-March 2015, he said. After that ﬁnal agreements on the joint venture with India may be reached.

Russia allows supply of buffalo meat by Indian companies Russia has allowed imports of buffalo meat from India from December 4. Russia’s veterinary regulator Rosselkhoznadzor will send its inspector to India to exert permanent control over consignments of buffalo meat destined for the rustoms Union. Four Indian companies have been certiﬁed to supply buffalo meat to Russia, offering additional volumes to replace other imports blocked due to the West’s Ukraine-related sanctions. RIBR

Indian businessmen and journalists to visit Crimea soon A group of Indian businessmen will visit Crimea under an agreement with Crimea’s head Sergei Aksyonov, Georgy Muradov, Crimea’s vice-premier and the permanent representative of the Republic of Crimea under the Russian president, said. “Indian businessmen have great interest in Crimea. They are ready to implement investment projects on the peninsula. There is an agreement that several groups of Indian businessmen will visit Crimea soon,” Muradov told TASS. He also said that a group of Indian journalists was also planning to pay a visit to Crimea. Aksyonov accompanied Russian President Vladimir Putin on his recent trip to India. RIBR

India-Russia ties sparkle bright with diamonds Direct diamond trade between India and Russia will boost economic ties and global demand. ALEXANDRA KATZ

President Putin reminded that Russia’s diamond reserves are more than 1 billion carats, the largest in the world, while Russia’s Alrosa company accounts for more than a quarter of the global diamond mining. “Indian companies and companies with Indian capital account for about 50 percent of Russian rough diamond sales. Considering that, we need to think about closer cooperation,” said Putin. Modi noted that most Russian rough diamonds come to India indirectly via trade hubs in Antwerp and Dubai. He invited global mining companies, including Russia’s Alrosa, to increase their business with India by selling rough diamonds directly to Indian companies. “I made three proposals to president Putin. First, I would like Alrosa to have direct long-term contracts with more Indian companies. I am pleased to know that they are moving in this direction,” Modi said. “Second, I want Alrosa and others to trade directly on our diamond bourse. We have decided to create a Special Notified Zone where mining companies can trade diamonds on consignment basis and re-export unsold ones. Third, I asked to reform regulation so that Russia can send rough diamonds to India and reimport polished diamonds without extra duties.”

RIBR

iamond diplomacy was in full flow at the 15th India-Russia annual summit. The appearance of Russian president Vladimir Putin and India’s PM Narendra Modi at the World Diamond Conference on December 11 in New Delhi imparted the much-needed momentum to diamond trade between the two countries. While diamonds and precious stones contribute not more than 1.3 percent of Russia’s GDP and gems & jewellery sector of India contributes from 6 to 7 percent of country’s GDP, the diamond industry employs thousands of people. In India, it runs into hundreds of thousands. According to Vipul Shah, chairman of Gems & Jewellery Export Promotion Council’s (GJEPC), the NDA government led by Narendra Modi has recently accepted the industry’s demands and suggestions to establish Special Notified Zones (SNZ) for the import and trading of rough diamonds, where the net income is fixed and taxes are paid only on invoices raised to Indian companies. The SNZs are also known for some other taxation and bureaucracy simplifying measures. Addressing the conference,

PRESS PHOTO

GLONASS Union may set up $100 million joint venture in India

Vipul Shah, chairman of GJEPC (left), and Andrey Polyakov, vice-president of Russian diamond giant Alrosa, share notes at the World Diamond Conference held in New Delhi on December 11. “I strongly feel that if India and Russia come together, diamonds will sparkle the whole world,” Modi proclaimed in eloquent Hindi. Direct trade pacts On the sidelines of the conference, Alrosa signed long-term agreements with 12 Indian companies. Earlier, only six companies enjoyed the privilege of getting rough diamonds directly from the miner. “As a diamond manufacturer, we employ 25, 000 people. We need a stable supply of rough diamonds to ensure stability of the production cycle,” Bharat Kakadia, director, Sheetal Manufacturing Company, told RIBR. “It is only possible with getting rough directly from Alrosa because the diamond market functions in such a way that middlemen trading diamonds via Antwerp, Dubai and other hubs speculate in diamond trade by either withholding rough stock and

creating supply deficit or flowing it out in the market and crushing the prices.” “This is significant both for Indian diamond companies as well as for Alrosa. Direct contract showed their effectiveness in the previous contract period,” Andrey Polyakov, Alrosa vice-president, told RIBR. “About 70 percent of diamonds are being manufactured in India. The stability of the market depends on the manufacturers. We need to make projections years ahead because we invest billions of dollars in exploration and mining itself.” Having proven expertise in diamond cutting and polishing, India could export not only polished diamonds and ready-made diamond jewelry to Russia, but also its manufacturing skills. Addressing the business community in New Delhi, Putin invited Indian diamond manufacturers to invest in manufacturing units in Russia.

Energy a key to boosting trade to $30 bn Trade in energy resources may become a vital source for bilateral trade relations. VIKTOR KUZMIN

Oil will be delivered by sea; however, it is not yet clear yet from what sources. “We will use all possibilities,” stressed Sechin. The deal amounts to $5 billion a year and it will immediately augment the volume of bilateral trade by more than a half. There are, however, sceptics. Rusenergy partner Mikhail Krutikhin told RIBR that after signing contracts with China Rosneft does not have enough free volumes of oil for export. “Moreover, sending oil to China halfway to the Pacific terminal of Kozmino does not allow for confidence in the export to India from this direction,” he said. Oleg Dushin, the Deputy Director

RIBR

ussia’s Minister of Industry and Trade Denis Manturov said Russia and India plan to triple bilateral trade in ten years to $30 billion by 2025. One of the main drivers for growth could be trade in energy resources and building industrial cooperation. During President Vladimir Putin’s visit to Delhi, the Russian oil giant Rosneft and India’s Essar signed a preliminary contract for the supply of 10 million tonnes of oil over the next 10 years. According to Rosneft’s CEO Igor Sechin, the pact envisages supplies to be initiated as early as 2015.

of the Regional Investment Company, prefers to be an optimist. “In 2013 Rosneft produced about 207 million tonnes and this year it has produced nearly 205 million. And since part of the supply is on short-term contracts,

it is possible to change them for Indians,” he told RIBR. The expert also said Rosneft is planning to stabilise production at mature fields and plans to focus more on Yuganskneftgaz. He also expects growth in produc-

Investment funds to pump billions into airports, toll roads, hydro-power, coal, renewable energy

rapidly developing country. It is necessary for our companies, due to the rapid fall in the price of oil, to broaden their presence beyond Russia, exporting not only oil but also, for example, expertise by such companies as RusHydro and RosAtom. We see an interest in Russia from Tata Power and other Indian companies to broaden their presence in Russia. During the visit, the scene was set for starting both these processes.

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Ramesh Shah, owner of Excel Overseas Pvt ltd, which has manufacturing units in Russia, told RIBR: “Opportunities are there, but considering current economic situation and depreciating rouble the business becomes really tough.” The diamond industry is facing a decline and needs to revive the global demand. The World Diamond Mark, a non-profit foundation established in 2012 by the World Federation of Diamond Bourses, is making determined efforts to boost the growth of the diamond industry and increase the share of diamond in the luxury market sector. According to Alex Popov, president of the Moscow Diamond Bourse and the Chairman of the Foundation, India, being the hub of diamond manufacturing and trade, plays a key role in the success of the World Diamond Mark initiative on the global stage.

HYDROCARBONS: Rosneft signs preliminary contract with Essar for supplying 10 million tonnes of oil over the next 10 years

NEWS

tion at new fields. In his estimation, because of the new offshore drilling unit Berkut at the Sakhalin 1 project, the Arkutun-Dagi field will reach its capacity of 4.5 million tonnes in 2015 and this, certainly, will reshape the geography of oil flows. The agreement between Rosneft and Essar wasn’t the only one signed during the visit. The Russian company Zarubezhneft and Oil India (OIL) signed a memorandum of understanding for cooperation in hydrocarbon exploration and production in both countries. Prospects for the development of cooperation in new technologies in the energy complex are still foggy. Krutikhin pointed out that the technologies and equipment needed by the Russian oil and gas industry originate in the West and they are secondary in India.

KIRILL DMITRIEV

ALESSANDRO BELLI Specially for RIBR

Which pacts did the Russian Direct Investment Fund sign during President Vladimir Putin’s visit to India? Today, our main task is to start work on carrying out specific projects which will enable us to renew the historical significance of cooperation between Russia and India. We have signed two agreements. The first agreement is with the Infrastructure Development Finance Company (IDFC), which is a leading infrastructural foundation in India. Together we will be investing a billion dollars in the implementation of a bilateral project

in Russia and India; each party will invest $500 million. In the current case, we are talking about a broad spectrum of projects, beginning with toll roads and airports and concluding with hydro power projects in India. Many Russian companies are prepared to construct hydro electric power plants in India and they need financing for these projects to extend the export of technology to India. We are prepared to finance these current projects. The second agreement was signed with Tata Power. We are discussing the possibility of financing their projects in Russia and other countries. In Russia they are particularly interested

PHOTOSHOT/VOSTOCK-PHOTO

Russian Direct Investment Fund CEO spells out steps for enhancing joint infrastructure projects.

in developing coal deposits in the Far East. The Indian government has decided to establish a foundation for co-investment based on the RDIF model. Are you prepared to provide assistance? We are prepared to share both our expertise and our connections with leading soveriegn wealth funds. In the future, we are prepared to make investments togther with this foundation in projects in India and other countries. Russian investments in India’s economy amount to about $3 billion, while Indian investments into the Russian economy amount to more than $7 billion. I think that the volume of investments could be increased, roughly speaking, by a factor of five from each side over the next three years. Firstly, for Russia the Indian partnership is very important - India is a

Could you outline some specific projects? For a start, there is hydro-power. Russia is one of the most specialised countries in the world in this field. Secondly, there are joint projects in the coal industry. With Tata Power we are also interested in joint projects associated with renewable energy. This company has a large amount of experience in wind energy. Thirdly, in connection with the policy of import substitution we might discuss the joint development and manufacturing of high-tech equipment which will be in demand in Russia. It is important to mobilise companies for cooperation to create

instruments to attract investment into these projects. Why is there such a relatively small trading turnover between our countries? It seems to me that it needs to be sharply increased. How? For example, with China we established an investment council, which included the authorities, state and private companies. This enables us to remove barriers to business. In the format of the council we are able to discuss them and, accordingly, the authorities undertake the necessary steps. It is necessary to undertake steps in this direction with India. In India we have met more than 100 entrepreneurs who have complained about problems related to customs regulations and duties. It is time to comprehensively look at the Russian-Indian trade relations, evaluate them as a project to understand where there are difficulties, and take a series of drastic measures to get rid of them. The Asian markets are very important and we must establish additional conditions to remove the barriers. Only this step would enable us to increase the volume of mutual trade by a factor of two or three.

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

C |I |T |Y WEDNESDAY DECEMBER 17, 2014

URBAN LANDSCAPE: Steps include raising the costs of car ownership, suburban rail development, additional road construction and separate bike lanes

Moscow’s $62 bn trafﬁc-busting strategy Reeling from never-ending traffic jams, Moscow has launched a multi-pronged innovative plan. Specially for RIBR

oscow has launched an ambitious, multi-billion dollar campaign to unsnarl its notorious traffic jams, a gigantic task in a city ranked as the world’s most-gridlocked. In a slew of projects initiated by Moscow Mayor Sergei Sobyanin, the Russian capital aims to transform itself by 2020 through spending 2.9 trillion rubles ($62 billion) and doubling down on public transportation. Meanwhile, a paid-parking regime and expanded toll roads will increase the cost of car ownership. Amid signs of early progress, sceptics say success can only come in degrees. “Even if you spent the entire budget of the Pentagon [on improving Moscow’s roads], you couldn’t solve the problem,” says Mikhail Blinkin, director of the Institute for Transport Economics and Transport Policy Studies. The city’s twisted streets and centuries’ old layout mean that “Moscow can’t be a city for cars,” he says. The plan, which includes suburban rail development, road construction and even creating 300 kilometers of bike lanes, aims to save drivers 88 hours a year, according to the city’s Deputy Mayor Maxim Liksutov. Parking Blues A prominent feature of the mayor’s action plan includes getting Muscovites to park in approved spaces, instead of simply pulling their cars up on to the sidewalk or double-parking in the road. The latter creates an acute problem by tightening the city’s circulation into random bottlenecks. To fix the parking issue, city officials dispatched a fleet of little green tow trucks, which quickly became notorious for making off with inappropriately parked cars. In 2013, paid parking, regulated by the towing fleet, began in the center of the city, then spread outward. As of late October this year, Mayor Sobyanin announced that the average speed of traffic in the paid parking zones has “risen by an average of 12%.” The plan also foresees an expansion of the Moscow metro, boosting the number of stations by 78 to 250, and placing 93% of Moscow’s residents within walking distance of a metro line. Gridlock capital Moscow is ranked as the world’s most gridlocked metropolis, ahead of Istanbul, Rio de Janeiro and Mexico City, according to road navigation company’s TomTom’s 2014 yearly traffic report. It wasn’t always so. The roots of the problem stretch back into the Cold War years. Under the Soviet Union, deficiencies in the socialist economy made cars a luxury item. That left Moscow’s centuries’ old byways largely uncongested and meant that city planners had no need to worry about traffic. When the Soviet system collapsed in the early 1990s, the pent-up demand

INTERVIEW

for automobiles was unleashed. As Russian incomes grew, car ownership exploded and Russia emerged as one of Europe’s top five auto markets. Young Russians, whose parents and grandparents had never even dreamed of owning a car, enthusiastically embraced this new symbol of wealth. In 2014, Moscow’s official population of 11.5 million was driving at least four million cars, according to the Interior Ministry’s count. Some experts argue that Moscow was simply never designed to host cars in such huge numbers. Unlike the orderly grids of New York or Chicago, Moscow converges all transport options into the businessheavy city center. “Just look at [the roads] on Google maps – it’s like an asterisk,” says Blinkin. Roadblocks ahead? Yet even as Moscow grapples with its existing traffic problem, its population growth may only make the challenge even more difficult going forward. The city estimates that Moscow may grow to 15 million by 2025, and illegal immigration from Central Asia means that the real population may be much higher. Blinkin notes that progress will depend in part on the city’s commitment to spending in the face of economic uncertainties. In the meantime, Alisher Budtobaev, a Moscow taxi driver, is not amused. He says drily that the construction connected with the upgrade has actually made traffic worse in many places. “As soon as the construction ends, I expect it’ll become gradually better,” he says. Millions of Russian commuters — along with city officials — all hope that he’s right.

IVAN GUSHCHIN / TASS

SAM SKOVE

Traffic Nightmare: Moscow’s inappropriately named Garden Ring, which circles the city center, is usually 16 lanes of pure gridlock.

11.5mn 250

is the total number of Metro stations Moscow plans to have as a part of a plan to help solve the city’s trafﬁc gridlock.

Moscow University 5th in BRICS rating

300

7 Russian universities figure in top 100 in UK’s 2015 Times Higher Education BRICS rankings.

is the population of Moscow, according to the 2010 census. The population of the city is expected to rise to 15 million by 2025.

4mn

kilometre of separate bike lanes will be created as a part of a multi-faceted plan to ease trafﬁc woes.

cars are currently driven by Moscow’s commuters.

A revolution in dining culture Moscow’s dining scene has been transformed, with a proliferation of new and trendy restaurants. KIRA EGOROVA RIBR

hile the average American or Indian adult goes to a restaurant about five times per week, in Russia, dining out has never been much of a tradition. In fact, just a few years before the Soviet Union collapsed in the early 1990s, there were only 87 registered restaurants in all of Moscow, a city where millions live. An Associated Press article from 1981 noted that the Socialist capital had no Italian or French restaurants at all, and observed drily that the city’s lone pizzeria, located down a narrow side street a few blocks from the Kremlin, “falls well short of world pizza standards.” In order to cater to local tastes, Chinese restaurants served dishes

and Talk of the Town. Indians living in Moscow often gather at Darbar or Talk of the Town for celebratory events. Economic sanctions and the falling ruble have, however, restricted Russians’ purchasing power. Additionally, restaurants have been forced to change menus and suppliers, due to Russia’s ban on food imports from the US and the EU. In October, the Department of Trade released a forecast showing that, by the end of the year, the city’s restaurant market may suffer a drop of as much as 15 percent. Customer numbers have recently taken a hit because of the weakening ruble, the effect sanctions have had on the variety in menus and also a ban on smoking in restaurants, which came into effect this summer. A spokesperson for the Federation of Restaurant and Hotel Owners told Russian daily Izvestiya that chains have stopped opening new outlets and have begun a review of the existing ones.

accompanied by big helpings of traditional Russian black bread. But today, the city has been transformed by a revolution in dining culture that has been gaining momentum over several years. Official city statistics now list 11,000 restaurants, a number that has been expanding 15 percent to 20 percent per year since 2000, says Andrei Petrakov, executive director of the RestCon consulting company. The first Indian restaurant Jaltarang opened in the centre of Moscow in early 1980s. It was located near a beautiful historical building, and many Muscovites still remember it with a feeling of nostalgia. It was demolished in 1990s. Now, there are more places in Moscow, where one can relish Indian cuisine, both posh restaurants as well as affordable eateries. The most famous ones are Maharaja, Khajurao, Darbar

CLEB FEDOROV RIBR

ussian universities have made an important breakthrough in Britain’s 2015 Times Higher Education BRICS & Emerging Economies Rankings, with Moscow State University coming fifth in the rating. The ranking –- the second report of its kind by the influential international listing –- was presented at the first BRICS Universities Summit in Moscow on December 4. China’s Peking University and Tsinghua University led the top five, in first and second place, respectively. They were followed by Middle East Technical University in Turkey (third place) and South Africa’s University of Cape Town (fourth). The best university in Brazil – the University of São Paulo – came tenth, and India’s best university – the Indian Institute of Science – was ranked 25th. Seven Russian universities figured in the top 100. Besides Moscow State University, they are: the National Research Nuclear University (13th); Novosibirsk State University (34th); St. Petersburg State University (64th); the Moscow Institute of Physics and Technologies (69th); the Ufa State Aviation Technical University (70th), and the Bauman Moscow State Technological University (90th).

How has the demand for luxury accommodation in Moscow changed due to the economic situation? In Moscow and worldwide, the demand for luxury accommodation remains at a high level. It is chosen by the people who are accustomed to such luxury. There are fluctuations in the current case, as the countries from where guests are arriving have changed. Where before we had a lot of visitors from the UK or the Baltic states, this year we had more and more visitors from Brazil, Venezuela, and Asia.

ALEXANDER PETKOV

ANASTASIA KAMENSKAYA RIBR

he oldest hotel in Moscow, the Metropol, will celebrate its 110th anniversary in the coming year. On the eve of the anniversary of the hotel, RIBR spoke to the hotel manager Alexander Petkov about competition with international brands and working during this time of economic crisis. How is the market of luxury hotels in Moscow? Where does Metropol currently stand in this market? The market for luxury hotels in Moscow is developing and will continue to evolve. Because of currency

inflation and other economic factors, changes occur, but the luxury service class continues to be in demand. Metropol is a tradition that has existed for 110 years. Compared to the Ritz, Hyatt, and other competitors, we don’t have that catchy name known in advance for its quality standards; but there is the history. The Metropol has provided lodging for historical figures, writers, and artists – so just even to walk around the hotel and to breathe in the atmosphere is a very special feeling. We pay attention to what our guests think about the service at the hotel, and make their stay more comfortable not just at the Metropol, but also in Moscow.

Is the competition with luxury chain hotels really feasible? Chains in the Moscow market is a good thing. Competition should be present; otherwise stagnation occurs, which does not allow for the development of neither our hotel nor the market. For us, service is what we live for. For us, every guest is a special guest, and his/her needs are our priority. Technically, the Metropol is an independent hotel. I have worked in a chain hotel, so I can say that we are all much faster in our decision-making. For example, we thought that we should put breakfast in the corner of our buffet, and two days later, there it was. We did not have to call somewhere in the main office and check everything. The speed of decision-making gives us an

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Luxury hotels: ‘Competition a good thing, service is what we live for’ Amid intense competition, Hotel Metropol retains its edge with quality services and reasonable rate.

Only two Russian universities had figured in the 2014 Times Higher Education BRICS & Emerging Economies Rankings. Britain’s Times Higher Education compiles an annual world university ranking that, besides the QS World University Rankings and Shanghai’s Academic Ranking of World Universities, is considered one of the three most authoritative in the world. Yaroslav Kuzminov, rector of Moscow’s Higher School of Economics, told RIBR that government efforts are responsible for the success of higher education in Russia and stressed that the state has been systematically investing to boost the university competitiveness since 2006. Asked by RIBR why the magazine has started ranking universities in emerging countries separately from the rest of the world, Times Higher Education Editor Phil Baty said: “It’s like switching on all electric lights, so we can see the rising stars. There is a sense that in the overall world rankings, there are only 10 universities from the emerging economies visible in the world top 200. “ “So what we are trying to say is that there are really dynamic and exciting universities in these regions that are crowded out from the ranking due to the dominance of the US and Western Europe,” he added.

The majestic Hotel Metropol remains a magnet for those looking for luxury and service.

advantage, as we are rapidly adapting to each client’s request. How have the principles of competition changed in the new economy? We have become more creative, in-

cluding in terms of our service as well. For example, for certain segments, we have included a mini-bar in the room. When our guests call in, they do not have to worry about whether water is paid for. This is already included in the price, but that does not mean that we have to raise prices.

Has the hotel’s rate changed due to the current economic situation? Starting a price war among hotels is inappropriate. So far, we have not changed our rates. Instead of increasing the price of our rooms, we try to add more services to give guests more attention. The ruble lost 36 percent of its value from June, and if you look at the statistics, the majority of these losses occurred last month. That is, the plans we had for our guests at the end of October, already may not be compatible with the current conditions. For Europeans, who believed that Moscow is expensive, given the current rate, the city will seem more affordable.

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

F |E |A |T |U |R |E WEDNESDAY DECEMBER 17, 2014

INTERVIEW

ANDREY ZVYAGINTSEV

HERITAGE: Footage of Romanovs, ballets, gulags

Leviathan: Clash between man and state machine is a univeral story

Rare Russian ﬁlms set for global outing The world will soon get a glimpse of priceless films and videos in the Russian State Archive. JOHN NAUGHTON RIBR

t’s a veritable feast of rare films. The home movies of the last of the Romanov emperors, shot before the revolution changed Russia forever, are housed alongside footage recording the Gulag prison camps of the 1930s, the wartime siege of Leningrad, scenes from Yuri Gagarin’s epic space flight, Bolshoi Ballet performances and rarely seen images of the Chernobyl nuclear disaster, and thousands of other priceless film footage are all carefully preserved by the Russian State Archive. Housed in a guarded nondescript industrial building on the outskirts of Moscow, the Archive is an immense treasure trove of film and videos documenting the history and culture of the country from the time of the tsars to the break-up of the Soviet Union. Scarcely any of this vast quantity of more than two million items, including 138,000 documentaries, has ever been seen outside Russia, but that’s about to change, thanks to the dynamism and determination of one man: Anthony Gould.

Is it your first time in India? Has any of your other films participated in IFFI before? I have been to India already. To be honest, I do not remember exactly whether our other films except for Elena participated in the festival, but Elena won the IFFI award for Best Actress (Female) in 2011. The prize was awarded to Nadezhda Markina. However, even that time just as now, I represented actors here at the ceremony. This time we were even luckier since not only Alexei Serebriakov won the award for the main male role but the film itself won the main prize. It’s quite pleasant. Leviathan was awarded Best Screenplay at the Cannes festival in May, it won the top prize of the London Film Festival. Recently, the Russian Oscar Committee nominated it to compete for Oscar in the category of Best Foreign Language Film. Which of these is more important for you? I do not think about awards this way. The prize is a recognition of the work you have done, it asserts that you had done a good job. It is only a detached onlooker who can judge, compare, sometimes underestimate, sometimes overestimate. If a film wins a prize, it is a recognition of your efforts. And regarding the Oscars, it is yet too early to talk about it. Cannes has already happened but the Oscars finalists will be announced on February 22. We have not yet hit the top-5 of the nominees, we are in the long list of submission from 86 countries. Whether Leviathan will be short-listed, only time will tell. What does it mean for you to win the top prize in the Indian film festival? The film had already won a lot of prizes, to single out one would be

You have often said that your first films, The Return (2003) and The Banishment (2007) are kind of universal stories in isolation from the specific geographical, historical reality and time. The other films, Elena (2011) and Leviathan (2014), are different. They are clearly grounded in Russian realities. Could Leviathan be a film about America, or, for example, India? The Return and The Banishment are completely devoid of binding to a specific social environment. In The Banishment, we had an aesthetic purpose of creating such an environment where it would be difficult to say where and in which time the action is taking place. The only thing that gives the film some identity is the Russian language in which the actors speak. The Return is also detached from any specific social reality. It is a story of the relationships of father and his children. Elena and Leviathan, on the contrary, are grounded in the Russian realities. The story of Leviathan, its texture, the scene, all that the film is breathing with, is no doubt, today’s Russia of 2013 – 2014. However the story is quite universal. It is a clash of the state machine with a small man whose role in the social life is insignificant. The conflict of the man and the system is a universal story. It could have happened anywhere. I am often criticised for the fact that my films are not rooted in any reality, and claim to be a parable, which does not talk about places and times but people. It’s not that I was tired of these accusations and decided to make a different kind of film, but Leviathan’s story conceptualised after I heard a story that happened in America. It was about a man living in Colorado in a tiny town, who had an automobile muffler repair shop. After all the land around his house was bought deviously and the authorities refused to listen to him, he methodically, destroyed 11 buildings, including the town hall and other government offices and private homes of those who did a bad turn to him. In the end, he got stuck in

Skilled negotiator Gould, the effervescent boss of RussiaTeleRadio Worldwide (RTRW), is a people person, a throwback to a time when business relied more on personal relations than e-mail communication. Having started at the bottom as a 16-year-old trainee with Kodak, and rising to become its head of operations in Central and Eastern Europe (CEE), including Russia, the 72-year-old Gould is a skilled networker who has a fund of stories from legends, including film directors as diverse as Stanley Kubrick and Michael Winner, all of whom used his company’s product.

Russian director Andrey Zvyagintsev (top) and a scene from his acclaimed film Leviathan.

International rights Kodak supplied the Kremlin’s medical clinic with X-ray film and blood analysis equipment, which led to Gould meeting every Soviet leader from Brezhnev to Gorbachev. Brezhnev’s grandson even visited him in England. It’s these close connections along with a multitude of others forged over almost 40 years of commercial activity in the region, allied to a deep

The main characters of the film Leviathan , Nikolai (Aleksei Serebryakov) and his wife Lilya (Elena Lyadova). the basement of a building and then he said something on the lines of ‘nobody was listening to me, now all have heard.’ And he shot himself. It happened 10 years ago. I learnt about this story in 2008. Well, you must see the movie to understand what I’m talking about. But when you watch the film... remember this story about a man named Marvin John Heemeyer. Do you see any future prospects of cooperation between Russian and Indian cinematographers? Slumdog Millionaire can be shot only in India, the story was written as Indian project initially. It all depends on the ideas, and not on the desire to make a movie in cooperation with Bollywood. Ideas that excite me are not any kind of plan. I do not set any strategic goals. These ideas are snatched from the surroundings, they come from my observation of life and people.

A gifted filmmaker Andrey Petrovich Zvyagintsev, a wellknown Russian film director and actor, was born in Novosibirsk, Siberia on February 6, 1964. At the age of 20 in 1984, he graduated from the drama school in Novosibirsk as an actor. In 2003, he directed his first feature film The Return, which received many awards, including a Golden Lion at the Venice Film Festival. His second feature film The Banishment premiered at the 2007 Cannes Film Festival and was nominated for a Palme d’Or. Elena, premiered at the 2011 Cannes Film Festival, and won the Jury Prize. His 2014 film Leviathan was selected to compete for the Palme d’Or in the main competition section at the 2014 Cannes Film Festival. Zvyagintsev won the award for Best Screenplay.

Brilliant ballets The deal he struck involved paying a small annual fee plus an agreement to use archive material at a rate per minute. He’s already embarked on his first commercial venture, buying the rights to 11 ballets performed by the Bolshoi and Kirov (now Mariinsky) companies, which have been re-mastered for in-

Fresh light is about to be shed on aspects of a rich, intriguing culture previously hidden for decades from most of the world ternational distribution. Sky Arts is currently showing them in their Unseen Bolshoi series. These ballets are also being released as five DVDs and a fivedisc box set. The untapped potential of the archive is vast. There’s pre-Revolutionary footage of Tsar Nicholas II and family playing tennis on a wooden court and a swimming expedition which shows the young, Tsarevich, Alexei, unable to participate because of his haemophilia and looking upset on the sidelines. Gould believes many of the 47 fulltime Russian archivists, most of whom have worked there all their lives, know where all the treasures lie. When this material surfaces, the effect will not be unlike the discovery of an ancient sarcophagus. Fresh light is about to be shed on aspects of a rich, intriguing culture previously hidden for decades from most of the world.

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ndrey Zvyagintsev’s Leviathan, a film showing a battle of an individual with a state machine, corrupt bureaucracy and truculent church, which has been labelled as the first frank portrayal of a corrupt Russia, won the best film award at the 45th International Film Festival of India in Goa last Sunday. Alexey Serebryakov, who played Nicolay in the film, shared the best male actor award with Dulal Sarkar (Chotoder Chobi). Before taking back home the Golden and Silver Peacocks and the cash prize, Andrei Zvyagintsev spoke to RIBR about his new masterpiece and its universality.

strange. But some festivals, including the one in Goa, follow the tradition of accompanying the award itself with a cash prize. The people in the film industry, unless they are into entertainment or commercial cinema, do not get abundant financial rewards, so such the cash prize is a good support. I am very happy that in Goa, this tradition is still followed and winning films get rewarded financially as well.

KINOPOISK.RU

RIBR

PHOTOSHOT/VOSTOCK-PHOTO

ALEXANDRA KATZ

AFP/EASTNEWS

The director of Leviathan, which won top award at the Goa festival, shares his craft with RIBR.

understanding of the Russian business psyche, that have helped RTRW secure the international distribution rights to the archive. Getting this far, and raising the finance was a long journey. “Knowing all the right people as I did, I thought this shouldn’t be too difficult. Well, eight years and £600,000 of legal fees later, I signed the contract in June 2010.” Initially, Gould was looking for £14 million, but eventually he settled for a more modest £3 million, which, through a combination of high net worth individuals and small investors, he has largely raised.

Anthony Gould of RTRW has managed to get global distribution rights to State Archive.

CINEMA: ‘A Life on the Cross’ offers a rare glimpse into the legendary Russian filmmaker’s personal life and his obsessions reflected in his varied oeuvre

Unravelling Tarkovsky’s genius, life and artistic legacy PHOEBE TAPLIN RIBR

he metaphor underlying Lyudmila Boyadzhieva’s fictionalised biography is the image of revered Russian filmmaker Andrei Tarkovsky as Christ. With his messianic approach to creativity – “for me making films is a moral activity,” she quotes him as saying – and his ideological persecution by the Soviet authorities, Tarkovsky is ripe for hagiography. Boyadzhieva does not flinch from portraying the legendary auteur’s human failings, too. Tarkovsky may have been a genius and cinematic pioneer, but clearly he could also be a very annoying man. He was misogynistic – “a woman does not have her own inner world” – stubborn, insecure, naïve,

irritable, intolerant and “provocatively direct.” His observational skills, Boyadzhieva remarks dryly, lay more in “a refined perception of the smallest manifestations of the outside world, than in knowing how to relate to people.” “Tarkovsky’s seven-and-a-half films are a drop of something different in the ocean of commercial and simply bad cinema…” Boyadzhieva writes at the start. But she herself finds it harder to escape generic clichés. When Tarkovsky’s father, the poet Arseny, woos his future wife Maria in a park, he “took her in his strong arms.” She later tells him: “You’re my hero … Life will be wonderful!” and they quote Lermontov together.

Christopher Culver’s energetic translation grapples valiantly with the stilted dialogues, giving the young Tarkovsky some amusing, slightly anachronistic teenage slang: “cool kicks,” “whoa, man.” At the film school, Tarkovsky first announced his plans for a new kind of provocatively realist cinematography: “Let them crucify me.” His friend Andron responds, “A life on the cross!” Symbolically, this scene takes place on Sparrow Hills, Moscow’s bestknown viewpoint. “A Life on the Cross” devotes a chapter to each of Tarkovsky’s films, analysing their slow catalogue of selfreferential allusions, recurring motifs and portentous images. Boyadzhieva continues to recreate the director’s life at the time: the scandals surrounding the bleak, miraculous “Andrei Rublev”; the homesickness behind “Nostalghia”; or the desolate, otherworldly “Sacrifice,” shot in Sweden.

ANDREI TARKOVSKY “If one wants to be free, one should just be free without asking anyone for permission for this.” ULLSTEIN BILD/VOSTOCK-PHOTO

Lyudmila Boyadzhieva’s fictionalised biography is a nuanced portrait of Tarkovsky’s life and films.

“Art is an attempt to create an equation between eternity and image.”

Her imagery is variously biblical or bestial: Tarkovsky is “baited,” trapped or driven “like a horse.” The film-maker died at aged 54 in 1986. Boyadzhieva highlights his unique cultural role and symbolic, global legacy. “He embodies the image of the Russian artist for the West, and for Russia, the image of the rejected messiah,” she writes.

“I don’t know any masterpiece deprived of certain weaknesses, completely free from imperfections.” Andrei Tarkovsky’s engimatic genius continues to inspire new books.

“Every artist is guided by his own laws, which are not mandatory at all for other artists.” “Artists exist only because the world is imperfect.”