Dec 2009, Russia&India Report

Russia India

Veliky Novgorod Russia’s cradle of democracy is 1,150 years old P.15

REPORT

...Marching towards a common future A Business Report from The Economic Times In association with Rossiyskaya Gazeta MUMBAI ● NEW DELHI

Wednesday, December 09, 2009

EPSILON

Battle of the banks The fight for people’s savings

Blogosphere heating up A direct way to air your views

Literary legend turns 150 Anton Chekhov’s artistic legacy

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THE ECONOMIC TIMES

Prospects Russia’s capital can become a key transit link for EU-China trade

Moscow: Europe’s new bridge to Asia

President Dmitry Medvedev’s annual address to parliament clearly outlined his agenda, including structural economic reform by way of comprehensive technological and social modernisation, gradual expansion of political competition and a pragmatic foreign policy.

A unique air hub is taking shape in Moscow, with the potential to unite trade flows throughout all of Russia, forming a single chain with international transit corridors. It could also become an important link in EU-China trade. To achieve that, Russia needs to address fly-over fees and rivalry between airports.

covering to finish this October at 1348.Anyone brave enough to invest in the midst of the firestorm has been handsomely rewarded, but for the majority of investors, the water is still cold. Is it not too early for an IPO? “Not at all! Confidence is returning and we will have no competition to speak of,”says the general director, Artur Isaev, sitting in his modest office at the mini-campus of the Institute.

This agenda will determine Russia’s policy for the next few years, up until the 2012 presidential elections.

However, experts are confused by the disparity between Medvedev’s plans and his cautious approach. Some see this as weakness and lack of independence, while others say he is abusing his position to enhance his political image. Neither explanation reveals the president’s true strategy.

Of course, many prefer to think in policy terms. This opinion is typical of those calling for speedy democratisation, including radicals willing to liberalise everything and those yearning for “enforced”democracy.

Medvedev’s logic is broader: tough measures won’t make him popular. He simply does not have the backing Putin has. On the other hand, Medvedev can create a new public atmosphere to promote his agenda. A new Civil Society Institution and Human Rights Council have been formed and Nikita Belykh, a former opposition leader, was appointed governor of the Kirov region.

In addition, a couple of judges suspected of corruption were forced to resign, giving hope for positive changes in Russia’s judicial system.

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CONTINUED ON PAGE 7

IRINA SUKHOVA, VIKTOR KUZMIN RIR

Moscow’s airports are not what they used to be. Exposed to the pressure of the market economy and tough competition, their design, service and logistic systems have undergone a transformation. With the infrastructure updated, preparations have begun for the next stage, which will eventually see Moscow’s aviation hub entering the global competitive market.

The impressive growth rate of the Chinese economy, despite the crisis,combined with growing domestic demand, promises future expansion of the transit flow between Europe and Asia.

CONTINUED ON PAGE 8 GREG BAKER_AP

Stem cells to the rescue Is it too early for an initial public offering? A Russian company that captures the most versatile cells in the body for safekeeping hopes to showcase the stability of the market. Will Gemabank be handsomely rewarded or is the market still a scary place?

BEN ARIS SPECIAL FOR RIR

Recruiting the elite for the future

Tucked in behind a gleaming glass-and-steel tower in southern Moscow are the headquarters of Gemabank, Russia’s first cryogenic storage unit that keeps stem cells from newborn babies’ umbilical cords on ice. It may sound like science fiction, but this business practice is well established in the West. Gemabank offers Russians a kind of genet-

ic insurance policy. Western hospitals routinely offer to freeze these dynamic and versatile cells which can turn into anything the body needs and are easy to extract from the discarded umbilical cord. But the technology has only been available in Russia since 2003, and Gemabank’s owner, Russia’s commercial biotech company, Human Stem Cells Insti-

tute (HSCI), has more or less created the market on its own.

HSCI will launch Russia’s first post-crisis initial public offering (IPO) in November, ending the de facto moratorium that was imposed when Russia’s stock market crashed only a little over a year ago, with a loss exceeding the amount of $750 mn.

The stock market has recovered about half of its losses.

The leading RTS index fell from a high of 2487.92 set in May 2008 to a low of 498 in January this year, before re-

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BOOKMARKS

RUSSIA INDIA REPORT

Economy

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

www.rbcnews.com English-language business news www.minfin.ru/en Ministry of finance www.micex.com Moscow Interbank Currency Exchange (Micex) website

News in brief Money Russian customers have an increasing choice on where to stash their cash The stock markets of the BRIC nations (Brazil, Russia, India, China) are set to grow 30-40 pc over the next three to four years, predicts Mark Mobius, head of Templeton Asset Management.

Mobius said the countries have brilliant growth prospects, and his investment funds are now increasing their BRIC stocks.

Data published by the City of London indicates Russia’s stock market as the fastest growing market in 2009, having gained 137 pc since March. For their part, the stock markets of Brazil, India and China have shown growth of about 75 pc over the same period.

The latest developments confirm the BRIC’s status as an emerging leader in the world economy. Itar-Tass

Production forecasts predict increases in oil, gas and coal By 2030, Russia will invest $609-625 bn in its oil industry, according to an Energy Strategy endorsed by the government. Out of this sum, $491-501 bn will be channelled in exploration and $47-50 bn in refining. Figures are given in 2007 prices. Oil production in Russia in 2030 is projected at 530-535 mn metric tonnes (in 2008, it was 487.6 mn). Gas production is expected to reach 885-940 bcm, up from 664 bcm in 2008.

Coal production will grow to 425-470 mn metric tonnes from 326 mn in 2008. FC Novosti

Russia floats out frigate for Indian Navy A Russian shipyard, Yantar, has floated out the first of three Project 11356 frigates for the Indian Navy.

The warships will become modified Krivak III class (also known as Talwar class) guided missile frigates under a $1.6 bn contract signed in July 2006.

Sea trials should start in 2010.

The shipyard is to deliver the last warship to India in 20112012. The floating out ceremony was attended by senior officials. “India’s consul general to St Petersburg, Radhika Lokesh, was the godmother, smashing a coconut against the frigate, while a Russian worker smashed a bottle of Champagne according to tradition,” a spokesman said.

The new frigates will be armed with eight BrahMos supersonic cruise missiles. They will also be equipped with a 100-mm gun, a Shtil surface-to-air missile system, two Kashtan airdefense gun/missile systems, two twin 533-mm torpedo launchers and an anti-submarine warfare helicopter.

RIA Novosti

Bank wars threaten state supremacy If money is the lifeblood of an economy, then banks are the heart. And, to take the metaphor a step further, the world’s financial system just suffered a massive heart attack. So it seems an odd time for the leading international banks to be beefing up their Russian operations, but a war for the contents of wallets has recently broken out in Russia.

BEN ARIS RIR

The combined assets of Russia’s top 200 banks were worth just over one trillion dollars before the crisis, according to BNE’s annual ranking of CIS banks, and while their assets have fallen ten-fold in the last year, these banks are expected to claw back most of the lost ground over the next two years.

At the same time, bank service penetration is extremely low; according to pre-crisis surveys only one Russian in four has any kind of bank account at all – most people prefer to keep their cash in a banka (a glass pickling jar) at home. But banks have made massive inroads since the Kremlin launched a concerted reform effort in 2004; white goods retailer M-Video reported pre-crisis that up to a third of its sales were paid for using bank credits.

Russia’s banking sector remains dominated by the stateowned retail giant Sberbank, which is three times the size of its nearest rival, another stateowned giant –VTB Bank. However, in recent years, Sberbank’s near monopoly of retail banking has been whittled away by the rise of commercial banks –

VLADIMIR FILONOV_FOTOIMEDIA

Russian stock market leads in growth

Competition in the market for Russian bank customers has been heating up despite the crisis.

both foreign and local – that offer something Sberbank has always failed to provide: service. The long queues and surly

“Commercial banks offer what the stateowned Sberbank has always failed to provide: service.” clerks that have been Sberbank’s hallmark can’t compete with the brightly lit and high tech offices of leading commercial banks such Alfa Bank, which have been aggressively chasing new customers.

Big international banks have left most of the play to their smaller continental peers like

Raiffeisen International and Unicredit, which have been specialising in Eastern Europe since 1998. But everyone got seriously interested in 2007 when a wave of mergers and acquisitions swept the region, sending the price for a bank through the roof.

Britain’s HSBC was an early mover, setting up shop in 2005 with its offering of private banking for the rich and premier banking services to the emerging upper-middle class.

Another British bank, Barclays, also entered the market in 2007, buying Expobank right at the top of the market. Based in Russia’s Far East, Expo was a tiny regional operation on the border with China, but Barclays used it as a platform to launch their operations country-wide;

only two years on, the familiar white eagle on a blue background can be seen on cash machines across the country.

“If you want to know how committed HSBC is to Russia, look at the fact that we upped the bank’s capital by $200 mn in the midst of the crisis in September 2008,”says Moscow veteran and HSBC’s CEO Stuart Lawson, who also founded Citibank’s Russian operation in 1995.

The Russian banking sector remains wide open and, surprisingly, the average Russian is a much better credit risk than the average European. Because everyone was simply given their apartment following the collapse of the Soviet Union in 1991, Russians have almost no debt.

“It is hard to gauge the value of

Finance Russia’s discount rate is finally starting to play its role

Russian interest rate: trend analysis In late October, Russia’s Central Bank (CBR) lowered its discount rate to a record low of 9.5 pc, slashing it by another 50 basis points to 9 pc at the end of November.

MAXIM BUILOV RIR

These measures would have no significant impact had the discount rate not finally assumed the role it is supposed to play in developed economies – the regulator of the value of money.

Despite the latest cuts, Russia’s discount rate remains the highest among G20 nations.Yet,Russia has shown impressive

progress: over the past 15 years, having survived a number of domestic and international crises, the CBR lowered the discount rate by more than 23 times.

Until recently, however, the discount rate did not fulfill its main function, failing to affect borrowing costs for banks and industrial producers and largely focused on control over interest rates in the retail sector.

In Russia, interest paid on retail deposits is tax exempt provided interest does not exceed the discount rate plus 5 pc. Otherwise, the difference between the interest rate and the established maximum is subject to a 35 pc tax rate. The situation with re-

tail loans is similar, but in this case banks pay tax if the interest they charge is lower than the discount rate. For this reason, Russian banks were unable to introduce a grace period for credit cards. This only became possible after an amendment to the Tax Code.

It was only recently, largely due to the global financial crisis,that the discount rate began to regulate the value of money. In the summer of 2008, the Central Bank began to expand the list of securities acceptable as collateral for bank loans. Initially, the list included only low-yield government securities.This blocked the refinancing mechanism as

unattractive government securities were shunned by banks.As the crisis deepened,however,the list expanded, and many banks now have securities that can be used as collateral for a loan.

This scheme took some time to come into effect: the discount rate was still unable to perform its role at the height of the crisis last autumn.While the US Federal Reserve System and the European Central Bank were trimming their interest rates, the CBR, on the contrary, raised its discount rate from 11 to 12 pc on November 12, 2008, adding one more percentage point on December 1, to 13 pc. At the same time, the Central Bank

the residential real estate transferred to the population as, until recently, there has been no secondary market to price it,” says Roland Nash, head of research at Renaissance Capital.“But it should be worth hundreds of billions of dollars.”

SocGen has been in Russia since the 1990s, but built up its business slowly in bits and pieces. After setting up a rep office, it launched a greenfield retail bank called Banque Société GénéraleVostok (BSGV) several years ago and then bought Russian niche players like the leading consumer loans operations RusFinance and DeltaCredit.

However, three years ago, SocGen caught acquisition fever and paid $2.33 bn to oligarch Vladimir Potanin to take control of Rosbank, at the time the biggest private bank in Russia and still a top 10 player. Analysts called the valuation of 5.9 times book value “mind-boggling”at the time; in the 1990s, the Austrians who bought most of Central Europe’s banks paid about 1-1.5 times book value for them.

The rise of the big international banks will turn up the heat on the locals. While the likes of HSBC and SocGen can give Russia’s Sberbank and Alfa Bank a run for their money, the real losers in this battle will be the small Russian banks.

“Russia’s smaller banks are already under pressure.The crisis has been a strain, but now the cost of capital is going up; they are not going to be able to invest into the systems that will make them competitive,” says Lawson.

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was pumping cash into the country’s ailing banking sector.

Both loans were issued at far below the discount rate. Sberbank and Vnesheconombank then redistributed the assets among commercial banks.

Even now, the CBR lends at the discount rate and most loans issued are short-term. Russian banks in need of cash can borrow for a short time. Borrowing for longer terms – to finance mortgages or industrial loans – remains problematic. This means that the latest reduction of the discount rate will not directly impact corporate or retail loans. In the future, a viable refinancing system might give banks security, allowing them to lend more freely.

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Maxim Builov is a special correspondent for Kommersant Daily magazine.

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www.rbcnews.com English-language business news businessneweurope.eu Economics and business opportunities in Eastern Europe and the CIS en.rian.ru/business RIA Novosti newswire

RUSSIA INDIA REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

Economy

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The IPO will be watched internationally: HSCI is the first to attempt to list on the Moscow Interbank Currency Exchange (MICEX) since the crisis began, and it will also be the first Russian hi-tech company to go public.

While the company is privately owned and has had no help from the state, the Kremlin will be pleased as HSCI plays on a theme close to the Kremlin's heart: since 2006 Prime MinisterVladimir Putin has pushed a policy of striving to harness Russia’s latent intellectual talent.

The economy may have been shattered by the fall of the Soviet Union, but one of Russia’s greatest strengths is the extremely high level of education.

Russia’s universities continue to churn out world-class scientists and engineers. The problem is there has been so much money to be made from more mundane ventures – such as building modern sausage factories – that high technology has been ignored.

The Kremlin has attempted to boot up a venture capital sector from scratch by seeding funds

with state-backed cash, distributed via the Russian Venture Company (RVC).The model draws heavily on the Israeli experiment in building up a hitech sector using state-backed venture capital which was a great success.

The RVC partners with private funds contribute 49 pc of the capital and leave the management of the fund and its assets to professional investors. So far,

‘Gemabank already has some 7,500 clients or about 0.2 pc of all Russian parents with newborns’ the company has set up seven venture capital funds worth about $630 mn, which are coowned by RVC and private investors.

As HSCI is floating on Russia’s largest domestic exchange MICEX – upon the recently established Innovative & Growing Companies platform that was created specifically to help small but dynamic companies raise capital – it hopes to tap into this capital, but HSCI will

State opens up on privatisation plans The Russian government announced a list of the most attractive assets that it hopes to privatise next year, in a bid to improve the management of the enterprises and reduce the federal budget’s deficit. The list consists of 14 companies, mostly ports, airports and shipping businesses.

ANATOLY MEDETSKY THE MOSCOW TIMES

A cabinet source revealed that in addition to stakes in the previously announced insurance industry leader, Rosgosstrakh; the country’s largest tanker shipper, Sovcomflot; and the largest seaport, Novorossiysk; the government will offer stakes in the smaller Tuapse Seaport, airports near the major cities of Novosibirsk and Yekaterinburg, and the sea resort Anapa.

The privatisation plan also calls for the sale of stakes in the Far Eastern port ofVanino, as well as the Murmansk Sea Shipping, Northwestern Sea Shipping, Sakhalin Sea Shipping,Volga River Shipping and Yenisei River Shipping companies.

The source said that for sales

to proceed, President Dmitry Medvedev will have to strike these companies, except Rosgosstrakh, from the government’s list of strategic companies. Medvedev removed Rosgosstrakh from the list earlier this year. Medvedev, who called for more privatisations in his state-of-the-nation address earlier this month, is likely to approve of the measure.

The government anticipates that it will collect 77 bn roubles ($2.64 bn) in these and other sales.

The figure compares with a budget deficit of three trillion roubles ($103 bn).The other assets for sale are 435 unspecified wholly government-owned companies.Their sales account for 22 bn roubles ($754.53 mn) of the total figure.

The privatisations are expected to improve the management of the companies by reducing the swollen size of properties under government oversight.

“It’s obvious to everyone that they are excessive,”the source said, speaking on condition of anonimity.“It’s impossible to manage all this huge mass effectively.”

While most potential investors

also appeal to regular investors.

Much of the Kremlin’s money has already been disbursed, yet n o n e o f t h e p ro j e c t s h a s achieved any concrete results.

The IPO will provide an acid test for Russia’s prowess in technological innovation.

HSCI does have an interesting story to sell. Gemabank already has some 7,500 clients, or about 0.2 pc of all Russian parents with newborns. The company will earn revenues of about $5 mn this year, and is actively expanding into the Russian regions, as well as further afield, with offices in Ukraine and Kazakhstan.

“It is a fast growing business; we have 60 pc growth per year,” says Isaev.“In more developed markets such as Germany and USA, this type of technology has been around for five and 10 years respectively, and provides a service to about 2-3 pc of new parents. So, we are expecting a 10-fold growth in this business over the next five years.”

The price range for the offering of about 20 pc of the company’s stock has been set at between nine roubles and 11 roubles per share, which values the company at between 675 mn roubles

will be more interested in such industry leaders as the Novorossiysk Seaport and Sovcomflot, the smaller companies could draw bids from their current private co-owners,said NadezhdaTimokhova, a transportation analyst for the Metropol investment company.

Billionaire Oleg Deripaska’s investment company Basic Element owns around 13 pc in the Vanino Port that handles a lot of cargo from the aluminium giant Rusal, where Deri-

PHOTOXPRESS

Stem сells to the rescue

The IPO marks the first biotech company originating from Russia that has enjoyed such commercial success

($23.18 mn) and 825 mn roubles ($28.34 mn).

The offer price is about five times current revenues, which puts HSCI on par with peers in the West.

Isaev points out that these companies are operating in saturated markets, whereas HSCI is only starting to develop a massive market. Unlike manyWestern companies, HSCI also has a research arm that has been developing commercial products based on its stem cell research.It

paska has a holding. Basic Element spokesman Sergei Babichenko said he had no comment when asked whether the company would be seeking the government’s 55 pc share in the port.

Norilsk Nickel, which is a major co-owner and client of the Yenisei River Shipping Company, didn’t respond to a request for comment.

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First published in The Moscow Times

List of companies to be privatised Company Sovkomflot Novorossiisk Seaport

Profits (2008, unless stated otherwise) 25 pc minus $406 mn one share 20 pc $129 mn Stake

Vanino Seaport (Vanino, Khabarovsk region) 55 pc

$76.7 mn

Rosgosstrakh (Moscow)

13 pc

1.2bn roubles

Yenisei River Shipping Company (Krasnoyarsk)

25.5 pc

518 mn roubles in the nine months of this year

Sakhalin Sea Shipping Company (Kholmsk, Sakhalin region)

25.5pc

199.1 mn roubles

Murmansk Seaport

34 pc

971 mn roubles

SG-Trans (Moscow)

100 pc

283 mn roubles

Tuapse Seaport

25 pc

740 mn roubles

Koltsovo Airport (Yekaterinburg)

34.5 pc

583 mn roubles

Tolmachevo Airport (Novosibirsk)

51 pc

128.5 mn roubles

Volga River Shipping (Nizhny Novgorod)

25.5 pc

151 mn roubles

Murmansk Sea Shipping Company

25.5 pc

215 mn roubles

Northwestern Sea Shipping (St Petersburg)

25.5 pc

8.3 mn roubles

has pioneered a technique that introduces DNA into cells, which brings an increased measure of predictability to the process.

The company is hoping that one of its three products currently in the pipeline will score on the commercial market.

The first is designed to stimulate the development of the cardiovascular system, and is aimed at patients who have blood circulation problems, especially at the extremities of

their limbs, which are difficult to treat.

Another stimulates the regeneration of tissue, and will help people recovering from heart attacks.The third is a skin rejuvenation beauty treatment acting at the cellular level.

All three are still at the clinical trial phase of their development.

However, if any one of them proves to be effective, it could send the company’s revenues through the roof.

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The net worth The world’s governing body for Internet domain names has decided to allow the use of nonLatin characters, clearing the way for the .рф suffix and websites named in Cyrillic.

made acquiring Cyrillic web addresses an early priority. The . рф suffix will officially be delegated to Russia in February or March of next year, said Maria Mokina, spokeswoman for the Co-ordination Centre for Top Level Domain RU. MARIA ANTONOVA THE MOSCOW TIMES Industry experts played down the importance of the .рф suffix The first step in a long effort to for spreading Internet usage or make the Internet less reliant the Russian language.“Users are on the Latin alphabet allows attracted to services,not domain “nations and territories to names,”saidTatyana Komarova, apply for Internet extensions… spokeswoman forYandex, the made up of characters from country’s leading search engine. their national language”, the AndreiVorobyov, spokesman for not-for-profit Internet Corpo- the registrar RU-Centre,said .рф ration for Assigned Names and was likely to have a different auNumbers (ICANN) said in a dience,“targeted for the local statement following a week- community”,while .ru would aplong summit in Seoul, South peal to a wider range of users.

Korea.

Communications and press min“This is... an historic move to- ister Igor Shchyogolev said that ward the internationalisation of “Russia would be the first counthe Internet,”said ICANN CEO try to use domains in a national and president Rod Beckstrom. language”.The localisation of “We made the Internet much names“will help remove the lanmore accessible to millions of guage barrier”,leading to“further people in regions such as Asia, increases in the number of Interthe Middle East and Russia.” net users in Russia”,he said.

ICANN chairman, Peter Den- In May,Mr Shchyogolev estimatgateThrush called it“the biggest ed that Russia would see a 34 pc technical change to the Internet increase in Internet users this since it was created four decades year, to almost 63 mn people, ago.” from 47 mn in 2008.

Currently,more than two million Originally published in domains use the .ru suffix,though The Moscow Times President Dmitry Medvedev

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RUSSIA INDIA REPORT

Business

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

www.gazprom.com Gazprom official website www.oilru.com/or/39 Oil of Russia magazine www.oilandgaseurasia.com Oil and gas magazine www.rosatom.ru/en Rosatom website

Oil & Gas Energy continues to be a strong binding factor for the Indo-Russian relationship

VIREN NAIDU RIR

How much potential does the oil and gas sector have for joint projects by India and Russia?

It’s true that India and Russia can participate in the oil and gas sector more effectively and become joint“Bosses of Energy”.

As far as India is concerned, it is an energy-starved country.

Russian energy companies have major hold of their two giants, Gazprom and LUKoil. Russia is the major energy supplier to Europe, accounting for 20 pc of the western European market.

The major supplies of Russian oil and gas production come from fields in western Siberia.

Oil accounts for about 30 pc of India’s total energy consumption.The majority of India’s 5.4 bn barrels of oil reserves are located in Mumbai High, upper Assam, Cambay, Krishna– Godawari and the Cavery Basins. The Mumbai High field is by far India’s largest, with current output of around 260,000 barrels per day. India‘s average crude oil producing level for 2003 was 819,000 bbl/d. India had net imports of over 1.4 mn bbl/d in 2003.

As far as India’s primary energy demand is concerned, each fuel’s contribution to the increase of total primary energy supply for the past 26 years is the following: •Incremental total demand for the next 23 years will be almost twice that of the past.

•Incremental oil and gas demand will be much larger than in the past.

•Although coal’s growth is lower than that of the other fuels and its share declines, it will remain the largest contributor to the demand increase in absolute terms.

So, there will be a shift in the complexion of energy consumption in India. Coal will continue to be the major supplier of energy, though with some decline in growth.The importance of gas usage is bound to go up, much more than that of oil. The balance between oil and gas will shift. So, there will

Dr Ashutosh Karnatak, an energy analyst be an overall change in the nature of demand. The market share of gas in the energy mix will go up.

What are the most important points from Indo-Russian strategic projects in the oil and gas field?

1. The partnership on the Sakhalin project in 2001, when India won a 20 pc steak.

2. Russian commitment to the Kundkulam project.

3. A seminar in Delhi on January 15, 2005, which enabled the private sectors of the two sides to explore new areas of co-operation in the crucial energy sector.

4. Establishing the Indo-Russian centre for Gas Hydrates, inaugurated at National Institute of Ocean Technology in Chennai on March 12, 2004.

5. The production-sharing agreement on block 26 in the Bay of Bengal on hydrocarbon prospecting, exploration, production and marketing in 2000.

6.The Memorandum of Understanding between ONGC and Gazprom in 2005 envisaging the co-operation in hydrocarbon processing, trunk line construction and operation.

7. Participation of gas pipeline companies like Rosneftegaz (RNGS) and Stroytransgaz (STG) in construction of highpressure gas pipelines in India.

What challenges do both countries have to overcome in order to achieve greater heights in the future?

Ownership of natural resources: both the countries could join hands in sharing resources. Let Russia be the supply centre and India be the consumption centre.

Foreign investment and/or foreign participation: Russia needs to develop its economy, and for-

eign participation has to be encouraged so untapped resources can be developed and get commercialised.

Provision of appropriate connecting infrastructure for production and consumption centres. Huge finances will be required from the Russian government so production systems, refineries, etc. can be developed.

In the same way, India also needs to develop infrastructure like pipelines for transportation of oil and gas.

An appropriate regulatory environment: in India, a gas distribution regulator is in place.

In Russia, such a regulatory environment is yet to be developed.

Development of clean energy technologies: at the recent summit of G8 countries, the IEA was advised to develop a series of technology road maps which seek to identify steps for development of commercialisation of 19 key energy technologies.

These are predominantly clean technologies which may contribute towards national energy security, economic development and helping in reduction of GHG emissions.

How do you foresee the Indo-Russian partnership five years from now?

The relationship is time-tested.

In the next five years, they are going to further their deep roots in a reformed manner, which will have significant regional and global impact. It’s imperative for India and Russia to participate in the development of non-renewable sources for Asian countries. The broad areas may be: 1.Development of the Asian Gas Grid (AGG): the AGG is a proposed gas pipeline that will connect various Asian countries for gas transportation.The proposal is for the grid to connect India with neighboring countries; the proposed grid would be able to fulfill the fuel needs of Asian countries, sourced from Russia and Turkmenistan, and delivering to India, Myanmar, China and ASEAN countries.

Asian economies including China, India and South Korea are currently growing at rates far higher than the US andWestern Europe. This trend is likely to continue in the future,provided a supply of energy is secured.

Asian countries, particularly China and India,are expected to account for a major portion of the incremental energy require-

Laying a gas pipeline in Northen Russia

ments of the world.Asian growth centres may have access to abundant potential supplies of gas from Russia, the Middle East countries and other former Soviet states.Access to this gas can be achieved through the proposed AGG, though several obstacles exist.Russia can mediate with all the countries to make

this pipeline project happen and ensuring energy can flow from west to east. It would of course also benefit substantially.

2. Development of renewable energy sources.

3. Development of Nuclear Power in India.

4. Opening of domestic market for international players in ac-

quisitions, participations, etc.

5. Exporting Sakhalin oil and gas to neighboring countries.

6. Participation in hydroelectric and thermal power projects.

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For the full version, go to www.rbth.ru

Challenging the energy forecast Although a recent International Energy Agency forecast predicts a global fall in demand for commodities, the recent green lighting of the Nord Stream and South Stream pipeline projects give the Russian energy sector every reason to be optimistic.

ARTYOM AMELIN RIR

For two weeks in January 2009, EU countries were cut off from Russian gas delivered via Ukraine pending a settlement between the two former Soviet republics. Moscow has been anxious to promote the Nord and South Stream pipeline projects to end its transit dependence on Ukraine, Poland and even Belarus.

In spite of Bulgaria’s decision to reconsider its original position, things looked up after Slovenia signed an agreement in mid-

November to take part in the South Stream project. Finland and Sweden recently gave approval for the Nord Stream route through the Baltic Sea. The Kremlin’s success, however, was marred by the International Energy Agency’s (IEA) forecast boding ill for the oil and gas industry. Based on its findings, the global gas market is likely to see a shift of power from the supplier to the consumer due to falling demand for commodities.The majority of Russian industry experts doubt these predictions.

“Gazprom’s market research demonstrates that current growth will continue in the long-term on a global scale. Gas consumption in Europe is expected to increase upto 700bn cubic metres in 2020 or by 12.5pc over the current level,” said Alexei Miller, deputy chairman of Gazprom’s board.

Dr Anatoly Dmitrievsky, direc-

NIKOLAY KOROLYOFF

FROM PERSONAL ARCHIVES

Energy analyst Dr Ashutosh Karnatak wrote a thesis about the feasibility of an Asian Gas Grid, and is an expert on the energy needs of Asian countries.

He consulted RIR's reporter in Mumbai about what Russia and India can accomplish in the oil and gas domain.

ALEXANDR CHIZHENOK_PHOTOXPRESS

More work needed to realise joint potential

The Nord Stream and South Stream pipelines are designed to move gas to Europe while avoiding politically sensitive territories.

tor of the Institute of Oil and Gas Problems questions the validity of the constantly changing IEA outlook.“A year ago, the IEA predicted a 10pc growth in demand every 10 years till 2 0 3 0 .” A c c o r d i n g t o D r Dmitrievsky, the negative scenario of falling energy demand will happen only if the economic meltdown continues until 2030,“but there is no data indicating this”.He also noted that demand projections should consider such important factors as the vibrant economies in the Asia Pacific Region, low energy consumption in Latin America and Africa and the two billion people who have no access to energy resources.

Oleg Zhilin, vice president of the Russian Gas Society, sides with Dr Dmitrievsky and views the IEA as a lobby institution.

“The IEA is a tool in the hands of gas consumers,” he said.

“We’re expecting a steady rise of gas consumption in Europe as existing production is in decline. There are no signs of an emerging cheap alternative.”

Yuri Lipatov, chairman of the State Duma Committee for the Energy Industry, is also sure that there are no grounds to expect a global slump in fuel demand.“It’s true that the economic downturn encourages world economies to be more energy efficient and look for alternative sources, while new government policies seek – in the long term – to develop an innovation-based economy and reduce our dependence on fossil fuels,”he said.

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BOOKMARKS

hotelbusiness.next-stop.ru Hotel business in Russia website businessneweurope.eu Economics and business opportunities in Eastern Europe and the CIS

RUSSIA INDIA REPORT

Business

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

Quotes

Hotels The hotel industry is trying its best to ride the recessionary storm

ALENA RIABOVA RIR

Before the crisis, the sparseness of hotels was the secret of Moscow’s profitability. For several years running,the capital maintained leadership among European cities in terms of hotel business growth and the absolute revenue per available room (value of the RevPAR). It was not the number of tourists that generated profits, but the price of accommodation: luxury hotels took over the capital with 3-star hotels looking pretty thin on the ground.At the same time, the overall number of hotel rooms was decreasing: the “Moscow”and“Russia”hotels were demolished, and the “Ukraine” and several minor hotels closed for renovation.

According to TRI Hospitality Consulting, one hotel room in a pre-crisis booming Moscow earned 149 euros, or 36 euros more than in London.

The first half of 2009 revealed the dangers of the high-pricing

strategy.According to STR Global, the profitability of upper and upscale hotels fell by a third. The crisis also put some new hotel projects on hold. Surprisingly, the hotel sector proved most buoyant and attractive on the commercial real estate market.According to irn. ru, while offices emptied devastatingly by 45 pc, the hotel occupancy rate decreased by 15 pc. The Moscow government has taken steps to facilitate investment in the hotel sector as part of its Tourism Develop-

opposed to 10-13 pc before the crisis).

The premium segment has been cornered by Hilton, Kempinski, InterContinental and other major chains catering to business clientele. They have survived the economic shrinking spell in Russia and emerged well-adapted to the new constraints.

Gianni van Daalen, European Chairman for Kempinski Hotels and General Manager of the Hotel Baltschug Kempinski Moscow, says that in the autumn, with rebounding business activity, the Kempinski Hotels have been 100 pc full on work days.“Luxury class hotels are in steady demand, being used by foreign investors and corporate clients, who often come to Russia on business and are not prepared to deny themselves comfortable accommodation”,he said.

Mr Van Daalen added that his company has not reduced its rouble prices, but the rates in euro rose, driven by the rouble exchange rate. Understandably, price-cutting in the luxury segment is damaging for international reputations, so operators sustain profit by offering special programmes and discounts instead.Two- and threestar accommodation is still a pristine segment of the Moscow hotel market.

“Luxury hotels are in demand from corporate clients who are not prepared to deny themselves comfort.” ment Programme by covering two thirds of the interest rate on a loan taken out to build a hotel in Moscow and by allowing investors to pay a mere 1 pc of the annual land lease rate during hotel construction and in the first three years following its commissioning.

Veronica Kartasheva, a consultant for hotel real estate with Cushman & Wakefield Stiles & Riabokobylko, says that most investors expect a return on investment of about 15-20 pc (as

IGOR TABAKOV_FOTOIMEDIA

Moscow needs to be more accomodating Hotel accommodations in Moscow are in alarmingly short supply. This is good, both for the hotel market and investors. One of the capital’s priorities for the next five years is the development of mid-scale, quality hotel services at moderate prices.

The hotel construction industry in Moscow is a target for growth.

On October 1, 2009,Vladimir Resin, Head of the Moscow Urban Planning Policy and Development Complex, announced at a press conference that such hotels would become a priority in the next few years.

Olga Shirokova, Director of Blackwood Consulting,Analysis and Research Department, pointed out that developers prefer to build high-class es-

Hospitality Both countries can attain milestones in this sector

Strengthening prospects for tourism

FROM PERSONAL ARCHIVES

Bobby Kamani, Director, Zuri Group Global discusses the milestones that both India and Russia have achieved in the hospitality domain and suggests inputs on ways through which this relationship can be strengthened in the years to come.

VIREN NAIDU RIR

Howhastherelationshipbetween India and Russia been in the hospitality domain? Can you explain it briefly to our readers tracing back in time?

The relationship has been good and is developing more and more, especially when it concerns Russian tourists visiting our leisure destinations. Russians making visits to Goa has seen a steady increase of around 15 pc every year.There are a lot

Bobby Kamani, Director, Zuri Group Global Russian charters that come into Goa during the months of November to April. A new trend and an interesting development we have noticed for outbound tourists from Russia is their growing interest in visiting wellness destinations for luxury spa holidays as well.

The Russian outbound market is among the fastest growing markets in the world and grew at approximately 9.4 pc in 2007; tourism statistics published by Kerala Tourism show that in 2008, there was a 47 pc growth in the number of Russian tourists visiting Kerala.While 6,632 Russians visited Kerala in 2007, the number of Russian visitors last year had grown to 9,766.

What are the achievements, both India and Russia have been able to accomplish in the hospitality domain?

The trade fairs that take place in Russia twice a year in March and September are a platform created for all travel agents, airlines and hotels to meet and discuss potential future business opportunities.The MITT (Moscow International Travel and Tourism) exhibition which

takes place in March every year has seen as a huge growth opportunity as Kerala Tourism made its inaugural entry at the MIIT. Further, Ayurveda and Wellness related series is gaining popularity with Russian outbound tourists and some 9,766 Russians visited Kerala last year, a 47 pc increase on 2008. The Russians have initiated and introduced direct Charter flights into major Indian resort destinations and thus, this makes it very much a more economically viable destination for Russians to fly down to.

The last year’s economic meltdown saw a considerable drop in percentage of the Russian tourists and charters which was around 25 to 30 pc. But this year looks extremely positive.

What are the lessons and learnings, both India and Russia can

05

tablishments rather than midscale ones because they pay off much earlier.

On the other hand, in Moscow – especially the centre – there is an acute shortage of construction sites. Opening a five-star hotel in an already-finished building is often impossible: technical specifications for equipping the future hotel are highly demanding.

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derive from one another in order to enhance this sector?

Russia can get extremely cold during most times of the year where you are surrounded by snow and this gloomy atmosphere makes Russians travel to warm countries which have bright sunshine and long stretches of beaches. Also, the fact that most Russians love to drink and party and enjoy life to the fullest make states like Goa a major attraction for Russia. The main challenge I think that both countries have to overcome is the concern of security and safety of each other when in each other’s country.

Also, the language barrier and the issues faced while obtaining visas need to be addressed.

How do you see the Indo-Russian partnership five years from now?

Increased air connectivity between Russia and the key destinations in India, especially throughWest Asia into Goa and Kochi would see a great increase of around 100 pc in the next few years.

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In comparison with other regions of the world, Russia as a whole, and Moscow in particular, offer the greatest hopes regarding prospects for building new hotels, as demand here remains sufficiently high for hotels of the “five-star luxury” class.

Setting aside our company’s policy, which aims to run “five-star luxury” class hotels, the following fact can be observed. In the centre of the capital today, there is a catastrophic shortage of three - to four-star hotels with a policy of medium-range prices, and also of the actually unexploited format for mini-hotels, which is so popular in European cities.

Gianni van Daalen European Chairman for Kempinski Hotels and General Manager of the Hotel Baltschug Kempinski Moscow

The fluctuations of the market also have their positive sides.

They force hoteliers to change their policies in the direction of maximum orientation towards the client. This should lead to an improvement in the competitiveness of the hotel business and in the quality of hotel services.

Pavel Lysenko Chairman of the company UNICOR, which has implemented a hotel project under the management of InterContinental

The level of success depends to a great extent on the quality of its management.

Therefore, if a developer is not a specialist in the hotel business, it is certainly advisable to bring a professional hotel operator into the project.

Polina Kondratenko, Director of Valuation and Consulting Department at Colliers International

06

BOOKMARKS

RUSSIA INDIA REPORT

Co-operation

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

rs.gov.ru Federal International Cooperation Agency (Rossotrudnichestvo) www.rbcnews.com English-language business news en.rian.ru RIA Novosti newswire

Forum Russian and Indian writers have agreed to work together on translation projects

Recently, Moscow hosted the Russian-Indian Public Dialogue Forum as part of its India Year programme. Government officials, scholars, presidents of leading universities and media – more than 200 people – met to discuss key issues of bilateral co-operation.

trade target of $10 bn,” said Borodavkin. Since 2005, bilateral trade volume has been growing by 30 pc on an annual basis. During the period from January to September, bilateral trade has already risen by 7.7 pc and Russian exports to India have been up by 17 pc in spite of the global financial and economic crisis.

Prabhat Shukla agreed with his Russian colleague:“$10 bn may seem a modest amount compared to the scale of our economies, but considering the deep global recession, this is not bad at all”,said the ambassador.

The identified trade areas promising quick growth include the energy sector, space exploration, telecommunications, pharmaceutical industry, nanotechnology and aircraft engineering.

Fo r u m d i s c u s s i o n s we re grouped into three subject areas: co-operation in science and technology, public diplomacy and the presence of Russia and India in the global media context.

Concluding the Forum, the Eurasian Russian Writers’ League and the Indian Writers’ Union signed an agreement under which arrangements will be made to translate works of Russian literature for India and Indian literature for Russia.

“Events such as the RussianIndian Public Dialogue Forum are bound to enhance relations between our nations,”said Alexander Chesnokov, Deputy Head of the Federal Interna-

ALEXANER ZELENKOV YURI VYSOKOV RIR

The prevailing subjects were related to cultural exchange, public diplomacy and promotion of the Russian language in India and of Indian languages in Russia, as well as cultural and media ties.

Alexey Borodavkin, Deputy Minister of Foreign Affairs of the Russian Federation, said that Russian and Indian leaders have met more than once this year at various international forums.“A stronger strategic partnership with India remains a priority of Russian foreign policy,”he said.

In his turn, Prabhat Shukla, Ambassador of India to Russia added,“Relations between our countries are very good at this point.There would be no exaggeration in saying they are stronger than ever before.”

Speakers at the Forum declared a short-term economic objective of boosting bilateral trade volume to $10 bn by the end of 2010.“We expect total turnover to reach $8.3-8.4 bn by the end of 2009. I am confident the countries will meet the 2010

ROSSOTRUDNICHESTVO

A new era for cultural connections

Participants of the Russian-Indian Public Dialogue Forum in Moscow.

tional Co-operation Agency (Rossotrudnichestvo) at the closing press conference.

His words were echoed by Agarwal Jai Prakash, President of the Delhi Committee of the Indian National Congress Party, who said:“Such forums provide an opportunity for detailed discussion of bilateral

issues that is impossible to have at a government level.”

Fyodor Rozovskiy, Head of the Russian Science and Culture Centre in Delhi, said that even in the worst of times, for example in 1992, when the official Russian centre in India received no funding, Russian scientific and cultural institutions pre-

The Rector of Jawaharlal Nehru University, Ramadhikari Kumar, spoke to RIR’s correspondent about the rich and interesting history of Russian studies in India. Now, as a new generation of academics prepares to take on the mantle, he believes the only way is up.

ALEXANDER ZELENKOV RIR

India has a tradition of learning languages; Russian became very popular after 1965. It was being taught earlier in some places, starting at the University of Delhi in 1946 – before Indian independence. Momentum picked when the Institute of Russian Studies in New Delhi was inaugurated in 1965.

Relations between India and the Soviet Union were at a peak, and this Institute was a symbol of friendship.

ROSSOTRUDNICHESTVO

The Russian language is on the rise

Ramadhikari Kumar is Rector of Jawaharlal Nehru University

The idea was to prepare cadres of philologists, teachers and translators in India itself – and this proved very successful.The Institute produced world-class experts on Russian language and literature.

At the moment, we have around 40 language departments in the country, most of them staffed by our own people. The institute

was renamed as the Centre of Russian studies after it became a part of Jawaharlal Nehru University (JNU, inaugurated in 1969).

Since then, we have come a long way.We have a very good cadre of specialists.We not only teach language practically, but also conduct theoretical courses in at least two places.

The popularity of Russian hasn’t gone down after the collapse of the Soviet Union.There was a very small period in the Nineties when enrollment went down, but not in our case. We felt no impact of the fall of the Soviet Union. We took on the same number of students or even more.The Center for Russian studies admits around 40 students into its first year programme. They can study to PGD level. They have multiple job opportunities. India and Russia have a strong collabora-

tion. The energy sector has recently come to prominence and co-operation is growing.

The demand for Russianspeaking experts is rising. The situation is very good here: I would say that, outside Russia itself, India may be the best place for really learning the language.

In the Nineties, when Russia was in a very difficult period, we made efforts to keep Russian teching alive. In April 2004, the Indian Association of Teachers of Russian Language and Literature united all university departments. This organisation, which I have the honor of leading, is promoting the second generation of Russia experts – some of us will retire very soon.

We want to leave a good, strong, responsible legacy.

In 2005, we organised a major conference entitled“Russia at the crossroads”. It didn’t con-

served the links between Russian and Indian societies.

Kumar Ramadhikari,President of the Indian Association of Teachers of Russian Language and Literature and Rector of the Jawaharlal Neru Univesity, noted that “we can say this forum was a turning point without exaggeration because until

now, we have not seen any bilateral events of this calibre for over 20 years.”

The Forum was organised by the Federal Agency for CIS Affairs, Compatriots and International Humanitarian Cooperation (Rossotrudnichestvo) with assistance from the Russian Ministry of Foreign Affairs.

centrate only on language, but a broader area of Russian studies. We received a very good response both from India and Russia. Our colleges realised their potential. Until that time, they did only teaching. There was no looking back: we have been organising these conferences every two years. In addition, we are co-operating with the Russian cultural centre in New Delhi on successful international conferences.

More Indian and Russian experts are coming into direct contact. JNU plays a leading role; co-operation between the institutions of India and Russia is going very well.

I must admit, we did have some difficulties. We used to have teachers from Russia working with us. There was a cultural agreement between our countries, but somehow this became non-functional over the past few years. Now both governments are working to reactivate the agreement.

I believe these two countries

cannot be separated. Relations have reached the people's levels: there is demand from the public. I know that in Russia there is a great feeling of love and affection for India. The same here. Russian and Indian people are in some ways very similar in their mindset and thinking. Our basic values are similar – compassion, love, feeling of justice, equality – and this brings us together.

These two countries will play a key role in the history of mankind.Threats are looming large in every region of the world.

India and Russia are going to play a decisive part in guaranteeing peace and security. We are interdependent.

The media also has a great role to play in the modern world.

RIR itself is charged with a key task. It brings people together, discusses problems and publishes a wide variety of views.

Indirectly, it is helping to solve the problems of society. In my opinion, this is a real responsibility for the press.

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BOOKMARKS

eng.kremlin.ru President of Russia website russiatoday.com Russia Today TV channel eng.globalaffairs.ru Russian foreign affairs online magazine

RUSSIA INDIA REPORT

Politics

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

07

Modernisation In times of change, a new strategy is essential

Recruiting the elite for the future In the president’s words…

ALEXANDER MIRIDONOV_KOMMERSANT

In the 21st century, our country once again needs to undergo comprehensive modernisation.

This will be our first ever experience of modernisation based on democratic values and institutions. Instead of a primitive raw materials economy, we will create a smart economy producing unique knowledge, new goods and technology of use to people.

Our relations with other countries should also be focused on the task of modernising Russia.

We must not simply be full of hot air, as they say. We are interested in capital inflows, new technologies and innovative ideas. We know our partners are counting on a rapprochement with Russia to realise their own priorities. Therefore, our foreign policy must be extremely pragmatic.

We have been providing direct support during the crisis, direct subsidies to Russian companies, and this money comes

to more than 1 trillion roubles now. In the future, we will provide such support only to businesses that have clear plans for raising effectiveness.

Regarding state corporations, I think that this legal form of enterprise has no future overall in the modern world. The corporations with a lifetime set by law should wind up once their purposes are accomplished, and those operating in a competitive business environment, should be eventually transformed into joint stock companies under government control.

Many aspects of political life have been subject to public criticism… As the guarantor of the Constitution, I will continue to do everything possible to strengthen democratic institutions in our country. At the same time, I would like to emphasise: the consolidation of democracy does not mean weakening the rule of law.

President Medvedev has to prove his ability to consolidate the ruling elite around his reform proposals

CONTINUED FROM PAGE 1

Similarly, a new Ingush president has been appointed, whose policy of appeasement and confidence won public approval.

Both Medvedev’s article“Forward, Russia!”and his annual address fell on good soil: the initiator of reform is not just the

President himself, but all society. It’s no coincidence that Medvedev so actively refers to reader feedback on his article.

Russia needs a consolidated elite. The process seems to be approaching a vital point. On the one hand, the elite have accepted Medvedev’s agenda, with top officials starting to

take innovation much more seriously. On the other hand, it is thanks to emerging consensus among the elite that the Kremlin can finally loosen its grip a little. In this situation, an economic breakthrough and technological upgrade are necessary, in addition to socio-political modernisation and work-

ing democracy. This is what comprehensive modernisation means under current circumstances.

Clearly, someone will have to pay for the breakthrough – with a restricted appetite and strenuous work.

But there is no need to follow the example of the mobilisa-

What signals did Medvedev send?

We asked some experts and politicians to share their impressions of the Russian president’s address to parliament. Dmitry Medvedev’s words inspired conflicting feelings in the people we consulted.

ALEXANDER RAHR EXPERT AT THE GERMAN SOCIETY FOR FOREIGN POLICY

This was a very interesting, blunt and at times, dramatic speech, which was in some ways reminiscent of the statements of Peter I, who wanted to make medieval Russia into a modern secular state. There were some very sharp words. It included a very large proportion of self-criticism, which has previously hardly ever been heard from the lips of leaders of the Russian state. In my view, if the leader makes this analysis of the state of af-

fairs in Russia, it means these affairs are looking very bad. At the same time the speech left a lot of room for various kinds of riddles. There is unintelligible political intrigue. In particular, it remained impossible to tell with whom the president of Russia wants to solve these problems, where his team is, and whether the Russian public feels that things in the country are as bad as their leader says.

If the president succeeds in shaking up the structure of Russia’s state-owned corporations, which was built by Putin, the economy will indeed begin to change. But for the time being, all we can say is that the fate of this message will be decided in the next three months…

The important thing is that Medvedev mentioned the need to change the political system.

But I was personally expecting much more from him...

DMITRY ORESHKIN POLITICAL SCIENTIST

Medvedev signalled some turning points where his policy differs from Putin’s. Foreign policy should be built on pragmatic interests, and not on“nostalgic prejudices”.Medvedev reported an influx of capital and ideas.

Putin said that we don’t need “comrades in pith helmets”,but Medvedev is willing to “buy them in”. Putin was carefully building a model of state monopoly, but Medvedev thought it pointless. Medvedev talks of financing non-state commercial organisations, which previously“used to beg for scraps at foreign embassies”.Medvedev called the Caucasus – a matter of pride for Putin – our main unresolved problem. (“There ought to be someone who is per-

sonally responsible for the state of affairs in this region.”)

All these signals were heard and understood by the deputies, the regional elites and other influential groups. But I don’t know who Medvedev will be able to rely on in all this.“Historical prejudices”,a particular approach and an unfriendly foreign policy are precisely what guides the Putin elite.

Medvedev will meet with organised resistance. I think a certain turbulence is emerging in the upper echelons of power.

KONSTANTIN REMCHUKOV EDITOR IN CHIEF, NEZAVISIMAYA GAZETA

It seems to me that Medvedev’s speech was considerably more dramatic than it might have seemed. He spoke for 100 minutes and the main thing to which I would draw attention is that his whole speech was

tion efforts of primary industrialisation, made under specific historical conditions and with excessive human resources. Our society is different today, and we need different modernisation mechanisms.

Real economic and technical modernisation and the creation of a free society are vital in

order to preserve Russia. If this urgent task remains unresolved, if we don’t get more sensible policies and a more sensible economy, the country will simply collapse under the burden of its problems.

full of ideas about change. In the last two years, the word “change”has been a slogan in all election campaigns the world over.When we compared the presidential campaigns in the USA and in Russia, we saw that in the former, 70pc of the population wanted these changes, but here people didn’t, because in recent years, the main idea in our lives has been the idea of continuity: we didn’t want changes. The uncertainty associated with changes frightens more than the price we have to pay for bureaucracy or for some kind of conservative policy.

And if the president is not to find himself alone in his desire to steer the country towards changes and to avoid a split between the old bureaucratic hierarchies and the hierarchies of modernisation, he will need the intellectual support of the elites, including their support for building a bridge of understanding between the president and society, which in re-

cent years has demonstrated a very high level of conservatism.

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Based on materials from Expert magazine

VALERY FADEYEV EDITOR IN CHIEF OF EXPERT MAGAZINE

In past messages, there were more specific decisions, which implied specific financing.The resources for implementing decisions and proposals in previous messages were money and bureaucracy. But that’s not how it is in this message. In this message, there is less talk about how the money will be found: there is simply less of it, because the crisis means the state budget is smaller and tighter.

But it is therefore possible to talk about bringing in a different resource. And what different resource is that? The social resource. Not only money and bureaucracy, but primarily society, all that is most wise, free and just.

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Material from Novaya gazeta, Tribuna, Polit.ru

08

Russia india report

Transportation

bookmarks

in association with rossiyskaya gazeta, russia THE economic times wednesday_december 09_2009

svo.aero/en Sheremetyevo International Airport www.avia.ru/english Russian aviation news and information www.aeroflot.ru/eng Russia’s largest airline

CONTINUED from PAGE 1

In 2006, flights to China accounted for as much as one fifth of Europe's total air traffic. According to Airbus' Global Market Forecast (China) for 20072008,passenger and freight traffic between Europe and Asia is set to rise further. On the eve of the global crisis, the company's experts predicted a five-fold increase in passenger traffic and a six-fold rise in freight transportation over the next two decades.

"This is a juicy fruit, and Moscow is in a condition to fight for it," one company head said.

The problem, however, is that foreign companies currently have to pay extra fees for the right to fly over Russia, on top of the usual air navigation fees; consequently, it is no surprise that many of them find ways to bypass Russia. To a certain extent, this has given a boost to air hubs in the Middle East and Central Asia.

To create an effective transit link between Europe and Asia Russia will have to revise its policy on fly-over fees charged for the right to fly over its airspace. Before the crisis, as part of preparation for WTO entry, Moscow was at least ready to discuss the technology and terms of the gradual withdrawal from this practice, but it is unlikely to do so before the end of the crisis.

Three rivals

Moscow’s claim on becoming a key global air hub is also paradoxically being held back by the existence of its three international airports - Domodedovo, Sheremetyevo and Vnukovo which are located far from each other and have different owners.

Domodedovo, Russia’s largest airport by passenger volume (over 20 mn in 2008),is owned by the private company East Line.

Sheremetyevo (14 mn) is stateowned except for Terminal D (see below), which is owned by a consortium with Aeroflot at the head.Vnukovo (8 mn) – by private investors and the Moscow City Government. The three have to compete for carriers and cash. On the other hand, there is a positive aspect to this too, as tough competition is making them enhance their infrastructure, while holding down prices and promoting the development of the service market.

Over the past few years,all three airports have launched largescale construction projects, changing them beyond recognition.

"In the past Moscow's airports made a poor show, with dim lighting masking the dated Soviet design, and they contrasted sharply with the modern airports ofWestern Europe and the US," recalls a Spanish businessman who has long business ties with Russia.

of other players in the sector," explained Galina Karzova,head of British Airways for Russia and Ukraine.

Germany's Lufthansa also opted for Domodedovo last year.

Among foreign carriers operating in Russia, Lufthansa boasts the largest business, carrying over one million passengers a year. Domodedovo has been upgraded recently, adding a multimodal transportation hub with focus on transfer passenger and freight traffic between Europe and Asia.

Yet, it seems that the time has come for Sheremetyevo to take revenge. A new state-of-the-art Terminal D has just opened its doors at Sheremetyevo. By midFebruary, the new terminal will service all of Aeroflot's domestic and international flights, as well as the flights of its SkyTeam partners.

In an attempt to avoid the problems that London’s Heathrow airport experienced upon the opening of its Terminal 5, when nearly 30,000 items of baggage were lost, Sheremetyevo’s management began testing baggage scanning equipment inTerminal D in May 2009.

According to Sheremetyevo’s press service, at the end of the testing period, a special exercise was held in which 600 persons played the role of passengers with 5.000 units of baggage to be processed. A new automatic baggage processing system – unlike any other in the world, according to Sheremetyevo’s press release – has been installed that uses a system of radio tracking devices for each piece of baggage. It is based on a five-stage scanning process that allows for 100 pc of outgoing baggage to be processed.

The world-renowned SITA company was hired to provide air transport communication and IT solutions within Termi-

‘By mid-February, the new terminal will service all of Aeroflot’s domestic and international flights’ Domodedovo transformed from a backward airport to Moscow's most modern facility, luring clients from its rivals, including S7 Airlines (formerly Sibir). S7, Russia's second largest carrier, leftVnukovo for Domodedovo, becoming its main domestic customer. Sheremetyevo was not spared, either, with three large customers – British Airways, Swiss Air, and Russia's Transaero – defecting to Domodedovo.

"Our shift to Domodedovo six years ago enabled us to introduce electronic ticketing ahead

NIKOLAY KORolyoff

Moscow: Europe’s new bridge to Asia

Sheremetyevo Airport's Terminal D was unveiled as SkyTeam's hub on November 15, 2009 nal D.“Over the course of a year, SITA has been working on one of its largest projects in Eastern Europe at Sheremetyevo,”commented the company’s regional Vice-President Ilya Gutlin,“We can confidently say that SITA’s high-tech approach to security within Terminal D allows us to guarantee a new standard of passenger service.”

The SITA Airport Connect CUTE platform facilitates nonstop communication between Terminal D’s staff and CUSS self-registration kiosks and drastically cuts waiting time.

Currently, the airport uses 180 such CUTE stations, 24 CUSS self-registration kiosks and 300 display panels with arrival and departure information.

NIKOLAY KORolyoff

Big future for a northern hub

Following the reconstruction of Sheremetyevo-2, the airport's combined annual passenger traffic is expected to increase to 25 m

In October, the government of St Petersburg agreed to develop Pulkovo Airport as a concession. Built in the early 1970s, Pulkovo will become one of the most advanced transit hubs in Europe. The terminal and fleet will be restructured by an international consortium, The Aerial Gates to the Northern Capital, whose controlling stockholder is Russia’s Vneshtorgbank.

The general plan is for a new international passenger terminal, which would be able initially to process some 7.4 mn passengers a year and 22 mn

by 2025. In addition to the terminal, Pulkovo will have a transit hotel, business centre, office buildings and parking. St Petersburg has earmarked 41,400 sq m for the entire Pulkovo project. The principal runway will also be refurbished, costing about 3.5 mn roubles.

It should be ready by the end of this year.

Meanwhile, an agreement has been reached with the Leningrad region regarding the construction of a third runway.

Elena Myagkova

Until recently, Sheremetyevo’s main problem was the lack of convenient and fast flight connections for transit passengers.

The terminal for domestic flights (Sheremetyevo-1) is located "across the road", a taxi ride away from the international terminal. "It is incredible: if you come from London and want to fly to your business partners in the Urals,you have to go through all the formalities, receive your luggage, clear customs and finally pay some $16 for a taxi to get to the terminal for domestic flights. It’s extremely inconvenient," complained a British corporate lawyer who refused to give his name.

Yet,the airport is improving fast.

In 2007, Terminal C came into operation, located next to the Sheremetyevo-1 terminal for domestic flights. In addition to the just-openedTerminal D,Terminal E is in the final stages of construction. In December the company also plans to complete the refurbishment of its old international terminal, Sheremetyevo-2.Together withTerminal E, all of Sheremetyevo's international terminals will be united under the same roof.The united complex will be able to serve up to 25 mn passengers a year.

Once 60 pc of flights have been transferred from Sheremetyevo-1, the old terminal for domestic flights will be redesigned to serve low-cost passengers.

The master plan through 2030, which Sheremetyevo has developed together with Britain's

Scott Wilson, focuses on the northern section of the airport, spacious enough to accommodate a third runway (the southern and northern sections will be linked via an underground automated transportation system), a new technical base and a multimodal freight complex.

According to Scott Wilson's forecasts, Sheremetyevo's total capacity by 2030 will rise to 64 mn passengers and over one million tonnes of freight.

Three hubs for the Big Three

With the launch of Terminal D, Sheremetyevo becomes an international hub for the Sky Team alliance, which Aeroflot joined in 2005. As for the two other Moscow airports, their fate is still unclear.

Domodedovo currently has two global customers: Star Alliance, led by Lufthansa,and OneWorld with British Airways in the lead.

Unlike Sky Team, Star Alliance and One World don't have Russian airlines among their members. It is on Russian airlines joining these alliances that the future of Sheremetyevo's rivals depend.

S7, which is the leading domestic carrier, has announced talks with One World. If the talks are successful, the alliance will settle at Domodedovo, while Lufthansa will have to find another Russian partner with a developed route network.

CONTINUED on PAGE 9

bookmarks

www.domodedovo.ru/en Domodedovo airport www.vnukovo.ru/eng Vnukovo airport en.wikipedia.org/wiki/Transport_in_Russia Find more information about transport in Russia

Russia india report

Transportation

in association with rossiyskaya gazeta, russia THE economic times wednesday_december 09_2009

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Cargo The North-South route is a faster solution

The new, quicker way to bypass Somali pirates

Yuri Solozobov RIR

CONTINUED from PAGE 8

Rossiya Airlines, based in St Petersburg, and UTair are seen as the most likely candidates for an alliance with Lufthansa. There are things to consider here: although Lufthansa's partner Fraport was among the winners in the tender for the reconstruction and management of St Petersburg's Pulkovo airport, it won't be easy to adjust business

for connections with Russian flights in St Petersburg: the bulk of the passenger flow from Germany goes to Moscow.

As for UTair, which has increased its share of the domestic market recently, it prefersVnukovo.Whether the German company will agree to change an airport for the sake of its Russian partner is a question.

There are no doubts aboutVnukovo technical capacity: like

Two major overland transit routes intersect in Russia – the East-West route, stretching from the Far East via theTransSiberian Railway to Europe, and the North-South route, running from Scandinavia and the Baltic region through Moscow and Astrakhan to Iran and India. Another major international route lies in the north – the North Sea Route – and links the Asia Pacific region to Northern Europe, serving as a bridge to transatlantic routes.Also important are transpolar aviation routes from North America to the East.

Moscow, as a major transit centre, can be incorporated into all of these routes. The city boasts of a well-developed railway infrastructure and is currently renovating its airport network.

Through a system of deep-water channels and rivers, Moscow has access to five seas: the White Sea (part of the Arctic Ocean), the Baltic Sea, the Black Sea, the Sea of Azov and the Caspian Sea. The International Monetary Fund estimates trade between Europe and Asia at about $700 bn a year. The number of containers shipped between Asia and Europe is expected to reach 40 mn by 2015, provided that the global economic crisis subsides.

The Crete Conference determined nine basic international transportation corridors (ITC) – connection routes for various types of transportation, providing for quick transshipment at

Sheremetyevo and Domodedovo, ongoing construction is extensive. According to Vitaly Vantsev, Deputy General Director ofVnukovo, a new terminal will be completed by 2012, which will be one of Europe's largest.Vnukovo will have something to offer to Lufthansa, too.

If all goes to plan,all the three airports will become major air hubs, which will open the road to new levels of competition.

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Terminal sufficient for years to come

Does the new Terminal D at Moscow’sSheremetyevoairportmeet international standards?

Certainly. In terms of planning and completeness, not to mention design, the new Terminal D is one of the world’s best airport terminals.It is behind the largest international facilities only in terms of size. Delta’s principal hub inAtlanta can service almost 120 mn people a year,while Moscow’sTerminal D can take just 12 mn, and Sheremetyevo as a whole 36 mn.Bear in mind,however,thatAmericans travel much more than Russians, and there are two other international airports in Moscow: Domodedovo andVnukovo.

WastheresomethingatSheremetyevothatDeltawasunhappywith before?

The old international terminal, Sheremetyevo-2, was built for the 1980 Moscow Olympic Games; its logistical standards have long been obsolete. The immigration and customs control facilities no longer meet today’s requirements.The market and passenger demands have changed greatly since the terminal was built. Terminal D is a completely new, state-of-theart structure, and it is in full compliance with the high standards of SkyTeam [an alliance of several major airlines].

How has the global economic crisis affected Delta’s passenger volumes from Russia?

From January to September 2009, Russia’s international air traffic dropped by 24 pc,accord-

ing to official statistics.Delta Air Lines offers only transatlantic flights from Russia, which is a very narrow segment of the market.Figures show that passenger flow from Russia to the United States increased by 6 pc over this period.

Whenthecrisisisoverandthepassenger flow resumes its growth at pre-crisis levels, will the new terminal’s capacity be sufficient for SkyTeam?

More than enough. The old Sheremetyevo-2 terminal could service up to 11 mn people during peak times.The new terminal’s capacity is 12 mn.Also, we should not forget that this terminal will mostly service SkyTeam member carriers, while Sheremetyevo-2 was also used by other carriers. The capacity will be sufficient for many years to come.

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A docked container ship at a Russian port. node stations. Particularly important for Russia are two routes: ITC 2 (East-West) and ITC 9 (North-South). ITC EastWest is a global overland transportation corridor spanning Japan, Russia and Europe. It will be based on the existing route Berlin – Warsaw – Minsk – Moscow – Nizhny Novgorod and the Trans-Siberian Railway. It will also embrace railway branch lines to the Baltic (Ust-Ladoga) and the northern ports of Russia (Murmansk, Arkhangelsk).

The East-West project is the most problematic, and not only because of the Trans-Siberian Railway’s restricted capacity.

However, there are quite a few rival projects that have emerged recently, in addition to the existing rivals who won’t step aside so easily either. One of these is the operating sea route through the Suez Canal, which handles almost the entire volume of cargo traffic between Europe and Asia. The second largest competitor is the planned railway corridor China – Kazakhstan – Russia – Europe, which has made significant progress over the past few years.

Unlike the East-West route, the North-South corridor has no major competition, and is not only a good idea but an effectively developing project. An

ap

Leonid Tarasov, Delta Air Lines general representative, Russia and CIS say Sheremetyevo Terminal D meets the high standards of SkyTeam.

photoxpress

Today, freight is transported between Asia and Europe predominantly by sea. However, the growing threat from Somali pirates and repeated attacks on ships have made sea shipping riskier than ever. Meanwhile, there is another route that is cheaper and shorter. It runs across Russia.

Somali pirates have been all over the news in recent months.

agreement to create this ITC was signed by the governments of Russia, India, Iran and Oman in September 2000. A number of other countries joined later, including Belarus, Ukraine and Kazakhstan. The main idea of ITC North-South is to ensure rapid freight transportation between the Middle East and the Baltic regions.

Leading exporters are primarily guided by two criteria: financial feasibility and the level of risk. Indeed, if you need to ship freight from India to Helsinki, the sea route via the Suez Canal will be three times as long as an overland route through Russia and will include exposure to the threat of piracy.

The alternative route through Russia would also be cheaper: Indian containers can be taken to the Caspian Sea, shipped by sea on train ferries and transported by railway to the northwestern ports.

To implement these plans, Russia developed aTransport Strategy envisioning the reconstruction of 21,000 km of railway tracks, 2,900 km of roads and 9 airports. In addition, there are plans to build new seaport facilities with a total transshipment capacity of 215 mn tonnes a year, as well as 12 mn tonnes for river ports. Particular attention will be paid to the development of Russia’s Olya port on the Caspian Sea, an ideal place for the transshipment of freight shipped from the Indian Ocean and South Asia to Europe. One third of the funds for the Strategy’s implementation will come from the federal budget, and the rest will be provided by private investors.Thus, a large Russian-German-Iranian consortium has been formed for the creation of ITC NorthSouth based on three major ports – St Petersburg in Russia, Hamburg in Germany and Bandar Abbas in Iran – all of whom are interested in using the new corridor.

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Region

Facts The Kirov region is in the north-east part of European Russia and has an area of 120,800 sq km and 1,503,529 inhabitants. The capital and largest city is Kirov, with a population of more than 450,000.

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This is a vital hub on the Trans-Siberian railway. Kirov has four state and 10 private higher educational institutions, as well as the country’s oldest library.

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BOOKMARKS

RUSSIA INDIA REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

www.kommersant.com/t-47/r_5/n_390/Kirov_ Region General information on the Kirov region www.invest.ako.kirov.ru/en Investment opportunities in the Kirov region

Democracy A former anti-Kremlin protester is now governor of the Kirov region

Nikita Belykh: reforming from within Can Medvedev appointee Nikita Belykh – an outsider among Russian governors – energise the moribund Kirov region? Some say the passive province is a grim microportrait of modern Russia.

Governor Nikita Belykh is making Kirov a litmus test for modernising Russia

ANNA NEMTSOVA

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Quotes The Kirov project is an attempt to involve some radical opposition activists in governmental work.

Talented people must work for the benefit of our country. We hope that in the future, more opposition activists will follow the path that Belykh and Gaidar have taken.

Sergei Markov State Duma deputy, United Russia

Medvedev is experimenting with different types of governors.

He appointed Boris Ebzeyev, a human rights expert, president in KarachayCherkessia and war veteran Yunus-bek Yevkurov in Ingushetia.

The president fired a number of long-term governors. He’s seeing how liberals can handle a region where they’re not popular.

Igor Bunin President, Centre for Political Technologies

It is Saturday, the street-cleaning day for students performing community service, and Kirov governor Belykh, getting his hands dirty just like everyone else, is beaming with delight.

The young volunteers around him sometimes pause to stare at this odd, restless man, the antithesis of the provincial apparatchik.The 34-year-old Belykh is indeed a strange sight – a one-time opposition leader who has seen the inside of a police car, he has been unexpectedly elevated to the establishment by the Kremlin he once protested against.

Only a year ago, residents of Kirov read news reports about Belykh’s detainment by police, for leading anti-Kremlin protests outside the Hermitage, in St Petersburg.

And now here he is, their governor, telling them that through democratic and liberal values there is a chance to transform their poor and depressed region into an example of recovery for all Russia to emulate.

“I am not going to order the changes, as some might expect,” the governor said.“I am trying to inspire local initiatives, so people make changes independently from me.” Last autumn, Belykh quit his position as a leader of the opposition party, Union of Right Forces, to the disappointment of party members and Russia’s democratic opposition. He declared the party had been compromised, essentially incorporated into a pro-Kremlin bloc and that its further agitation against the system was a sham. He decided to reform from within.

“For the first time in my life, I am on the same side of the barricades as the Kremlin,”Belykh said in an interview.“This is our chance to rehabilitate some democratic values, to liberalise modern Russia.We have no time to lose.”

Through close friends who are

state bureaucrats, he passed a message to the Kremlin that he would like a new job, possibly in one of the regions. President Medvedev took a bet on the out-

‘This is our chance to rehabilitate some democratic values, to liberalise modern Russia’ sider. Last December, he appointed Belykh the governor of Kirov, a huge depressed region about 500 miles north-west of Moscow.

Belykh faces no shortage of problems. The region, with 1.5

mn residents, has no gas or oil, dreadful roads, chronic unemployment, and little in the way of hope for its dwindling population.Young people try to leave the region right after high school.

Last year, 15,000 Kirov professionals took off in search for better jobs.

Maria Gaidar, 27, the daughter of Russia’s first prime minister and a former opposition activist, is famous for hanging off a Moscow bridge with a banner saying:“Give us our elections back!”

Now,as Belykh’s deputy responsible for health and social issues, Gaidar said the word“innovation”sounded strange in the region where hunger is still a problem and the death rate over-

KONSTANTIN ZAVRAZHIN_RG

Main industrial sectors include engineering, non-ferrous and ferrous metallurgy, chemical, microbiological, forest, woodworking, pulp and paper and food industries. Building materials, phosphorite, and peat are also important.

ALEXANDER GRONSKY

RIR

Maria Gaidar – now Belykh’s Deputy in charge of health and social issues – during an anti-Kremlin demonstration in 2007

shadows the birth rate.

Belykh started with something he knew best, transparency.“In his letter ‘Russia, Forward’, Medvedev tells us to fight corruption, modernise technologies and abolish state paternalism,” Belykh said in an interview.“What I can do is reform society from the bottom.

People can stop waiting for a command by the state, and instead they can start demanding and controlling us, the bureaucrats.”

Since taking office, Belykh has reversed long-standing practices that plagued Kirov and the regional level all over Russia: Belykh allows all street protests, which are routinely banned.The local media is free to criticise the governor, and he set up weekly meetings with various Kirov interest groups, including nongovernmental organisations and trade unions to encourage a free exchange of ideas.

To attract business from outside the region, he fought business monopolies in court and promised investors a corruption-free zone.To help the state budget, he auctioned off his official Lexus, and now drives his old Land Rover or takes the bus.

A former politician, he has friends everywhere, including among the oligarchs; Belykh called them all to come over and lend a hand in reforming Kirov.

“I spread the message that Kirov is being turned into an exemplary liberal and transparent political and economic zone – come over and invest your money, pay your taxes here and I personally will report to you on every fence or house built with your money,” he said.

By late spring, Belykh invited president Medvedev to pay a visit to Kirov. Medvedev came to inspect the work of his protege. The region is becoming a litmus test for Medvedev’s own success in modernising Russia.

On the day of his visit, the president promised the Kirov governor support with the most painful social and economic issues Belykh is battling.

Alexander Lebedev, billionaire and part owner of Aeroflot, came to Kirov to strike business deals. Lebedev, Belykh’s old friend, will construct twoand three-storey buildings, while Gazprom agreed to build pipes to bring natural gas to towns and villages. In the coming year, Gazprom will invest 1.5 bn roubles ($51.45 mn) in the region’s gas pipes and build a swimming pool – something Kirov has never seen. Roads are being built to multiple towns in the Kirov region where muddy tractor tracks were the only paths before.

The governor's biggest pride is his unique programme of selftaxation.

“We are trying to inspire people to control the authorities spending every kopek of taxes they pay from their pockets,”Belykh said. Out of the 360 districts in the Kirov region, 90 have voted for local taxation. Belykh believes the new trend will make municipal authorities more independent by giving the local authorities more control over their own taxes.

“Unfortunately, most bureaucrats still sit doing nothing, waiting for my command. I am not Peter the Great to force boyars to cut off their beards. It has been 300 years and the mentality has not changed,”Belykh said. He has bad moments, he said, when it seems to him that dictatorial methods would be more effective.“Most of the time I feel happy, though.We are an entirely new generation of politicians – this is our time and nothing is going to stop us.”

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editor.india@rg.ru

BOOKMARKS

www.russianinternet.com Rusian Internet website home page www.bl.uk/reshelp/findhelplang/russian Find Russian Internet resourses

RUSSIA INDIA REPORT

Society

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

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Internet blogging in Russia is a political weapon

Russia has a new and influential mass media outlet, which is simultaneously a serious irritant for officialdom – the blogosphere. There is consensus among experts that it has emerged as a real factor in Russian politics, as witnessed by the government’s close attention to its activities.

resonance was the crash of a helicopter with high-ranking officials on board in the Altai Territory. Initial reports said the officials were on a“government business”trip. However, the Internet soon posted pictures of mountain goat carcases among the aircraft debris. It became obvious that the officials were hunting animals classified as endangered species from the air. The revelation triggered a storm of indignation among bloggers.“Why is it that a peasant who has stolen a sack of grain is whisked away to prison in no time, while the big cheeses who have caused huge damage to people, wildlife and the country are left untouched?”

SVETLANA SMETANINA RIR

The Russian Internet today has the second biggest audience after television, but its influence on the thinking audience is beyond comparison.Internet users are the most advanced and influential segment of society.

A zone of freedom and justice

“Medvedev’s press secretary says he regularly reads the comments and even writes the answers.”

Web users fumed. Indeed. it took Rosprirodnadzor, the Federal Agency for Supervision of Natural Resources, four months to acknowledge the fact that poaching had occurred and for the Prosecutor’s Office to open a criminal case.

The Dymovsky Syndrome Last month saw the emergence of a new social phenomenon in Russia, a new method of fighting corruption and official abuses which the press has

MIKHAIL KLIMENIEV_RIA NOVOSTI

Alexei Shumm’s life is divided into two unequal parts, delineated by the fateful date of May 13, 20 09. On that day, his 32-year-old wife,Yelena, seven months pregnant, went out for a walk in a park near their home. On a pedestrian street crossing she was run over by an SUV, whose driver sped away, without even slowing. “She could not be saved. She died that same morning. She was my one and only beloved wife Lena, the mother of our daughter Nika. Our unborn baby was also killed by the driver.”

Alexei did not write this in his LiveJournal blog in order to invite sympathy.What prompted his message were the strange goings-on surrounding the investigation of the accident.

It turned out the driver was a policeman. Not only was he not detained, but the investigation was commissioned not to the district prosecutor, as the law stipulates, but to the very police unit employing the suspect.

And furthermore, no criminal case was opened.

Within hours, he received thousands of letters from angry bloggers, lifting his blog into the top five most read.The next day Alexei got a call from an investigator who informed him a criminal investigation had been ordered. The following day the driver was arrested. He is now in detention awaiting trial.

Another incident that had great

dubbed “the Dymovsky Syndrome”.A turning point came when not only common people, but law enforcement officers and officials who had fallen into disfavour, started using the Internet to expose injustices.

On November 6, Alexei Dymovsky, a police major from Novorossiysk, complained in a video on his blog about abuses in local law-enforcement agencies and demanded a meeting with Prime Minister Vladimir Putin. By noon on November 8, the policeman’s site had been visited more than 300,000 times. The major was discharged from the police and accused of libel. However, an inquiry was ordered on the basis of his complaints.

Today, at least seven policemen have followed the Novorossiysk cop’s example.All of them were long-serving officers who had some clout in the interior affairs agencies. They report facts of corruption and abuse,and other violations by their bosses, and complain about the wretched conditions in the service.

“Every society works out its own ways of interacting with the authorities,”says media expert Alexei Pankin.“Because normal democratic mechanisms of influencing officials are cumbersome or do not function at all in Russian society, people have decided to act directly through the Internet.And it works.”

Pankin does not agree with those who claim traditional journalism has lost all credibil-

President Medvedev became an active blogger in autumn 2008.

NIKOLAY KOROLYOFF

Blogosphere battles gain momentum

LiveJournal is Russia’s most popular blogging platform, with a monthly audience of nearly 9 mn people.

ity. For more than five years, he has sat on the jury of the Sakharov Prize for journalists. Every year, hundreds of journalists from across the country submit articles. The main themes are police brutality and abuses, the situation at orphanages and shenanigans with real estate.

The journalists do not only report facts, but accompany the people they write about to court to seek justice. True, the stories do not always gain public notoriety.Yet even here some exceptions can be cited, like the case of army recruit Sychev who was crippled from army bullying.

That outrageous case was first reported by a newspaper in the Urals, triggering a nationwide response.

The Russian Internet is 15 years old This is a jubilee year: Russia’s .ru domain was registered 15 years ago, and the most popular blog host, LiveJournal, is celebrating its 10th anniversary.

This is Russia’s most frequently visited resource, with a monthly audience of nearly 9 mn people.The Russian LiveJournal is in some ways a unique phenomenon. While in the West, where blogging originated, it is typically the pastime of teenagers, Russia’s LiveJournal had a more mature audience from the start: journalists, professionals and politicians.

Maxim Kononenko, a prominent journalist and creator of popular blogs, says their quality content began turning LiveJournal into a discussion club,

a site for thinking people, a place to exchange ideas.

The chief blogger of all Russia President Dmitry Medvedev joined the blogging community on October 7, 2008. His first video blog covered his trip to an international economic conference in France.

At first, Medvedev’s blog was not a bona fide blog, because it did not allow comments to be posted or feedback from the readers. But starting from 2009, that gap was filled. During the course of the year, the President’s blog received more than 1.6 mn visitors who left over 4,000 comments.

The President’s press secretary, NataliaTimakova, says her boss regularly reads the comments and sometimes even writes the answers himself. Medvedev is the first Russian politician who is (or tries to be seen) as a“digital native”.

The blog provoked mixed comments. Some praised the President for trying to get closer to the people; others felt it was just an attempt to look folksy.

Medvedev himself wrote on his blog that,“to me, blogging is an integral part of communication.”

Battles between professionals A feature of the Russian blogosphere is the existence of a large body of political commentators, some of whom are purveyors of the views of their employers. The verbal battles

in LiveJournal sometimes become very heated indeed. This was particularly noticeable during last year’s conflict in South Ossetia. According to Anton Nosik, the owner of LiveJournal, who until recently headed the blog service at Sup Fabric,“we saw the dedicated work of people who reported to the office in the morning and sat down to air certain views. They started in the morning and finished late at night, when they were replaced by the second shift.” In other words, the Internet was a vehicle for their polemics. Some LiveJournal users at the time even wrote an open letter to Sup Fabric demanding“a ban of anti-Russian agitation on LiveJournal.”The response was a flat no: a commercial company was not into censorship.

Incidentally, when the Russian company Sup Fabric bought LiveJournal several years ago, there was fear that this spelled “Kremlin control” over Russian users. However, as the founder of LiveJournal, Brad Fitzpatrick, said in an interview, Sup Fabric as a company is even more concerned about possible paranoid sentiments among its users than the users themselves.

According to the All-Russian Public Opinion Research Centre, 31 pс of Russians use the Internet to varying degrees. Clearly, these are the most thinking and forward-looking members of society. Perhaps the real civil society in Russia is being created in the blogosphere.

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BOOKMARKS

RUSSIA INDIA REPORT

Opinion

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

www.en.rian.ru RIA Novosti: Russian News and Information Agency www.russiaprofile.org Russia Profile online magazine

MANY WALLS MUST STILL BE DESTROYED JEAN-PIERRE LEHMANN VEDOMOSTI

The destruction of the Berlin Wall and the global market revolution that followed emancipated hundreds of millions of people. Though censorship and various forms of state control persist in different parts of the world today, never have so many people on this planet been able to penetrate walls of information to gain knowledge and connect with others. Estonians are members of the EU, many children of the new Russian elite attend Swiss schools, while the Chinese appear among the most visible tourists at the Olympic Museum in the city where I live, Lausanne.

Yes, but... While justifiably celebrating the 20th anniversary of the Berlin Wall’s destruction and the progress made by humanity, it is nonetheless difficult not to feel sadness.While that Wall may have been torn down, many walls remain defiantly standing and new ones have been erected.

In the mid-19th century, British statesman Benjamin Disraeli described what he perceived as two“nations”coexisting in Britain yet separated by a wall of mutual incomprehension:“Two nations between whom there is no intercourse and no sympathy; who are as ignorant of each other’s habits, thoughts, and feelings, as if they were dwellers in different zones, or inhabitants of different planets.The rich and the poor.”

Today there may be one globe in which elites from Mumbai, Shanghai, Dubai, London, NewYork and São Paulo converge to discuss common professional interests and share the same vintage wine, while remaining connected to their homebase with their Blackberrys or iPhones. But there are still millions of globally disenfranchised people, over three billion of whom do not even have access to a proper toilet.To paraphrase Disraeli: there may be one globe, but there are two very separate worlds between the globally included and the excluded.

The residences of the rich are surrounded by high walls, with barbed wire, guards and dogs, just as the Berlin Wall separated East and West Berliners.The film Slumdog Millionaire, and even more so Aravind Adiga’s award-winning novel The White Tiger show what is needed to cross from one side of the wall to another – crime being one of the few options available.These walls all over the world are likely to get higher and thicker following the crisis and the prospects of a jobless growth recovery. In two years, the numbers suffering from malnourishment have increased by 200 mn to a staggering 1 bn. With the current population explosion due to continue well into this coming decade, prospects for tearing down

DRAWING BY DMITRY DIVIN

the walls between these two worlds seem increasingly remote.

Soon after the destruction of the Berlin Wall, a new wall was being constructed along the USMexico border.With the new era the destruction seemed to herald, rich countries could have been expected to create a genuine“borderless”world by bringing down the walls to people in other parts of the globe. But the reverse happened. In the EU, the BerlinWall came down but the Schengen Wall went up, making it more difficult for non-EU citizens to get in. As the wealthy walled off their homes to keep out the riff-raff, rich countries turned into heavily-guarded fortresses.

Just as a borderless world is distant, we are also far from a just and open global economy. There are many trade walls (usually referred to as barriers).The most pernicious discriminate against poor countries; to cite one of hundreds of examples, tariffs imposed by the Unites States on im-

Letters to the Editor More on cultural relations, please!

Pensions policy

I am a regular reader of your publication. I would like to request more news coverage on cultural relations between India and Russia – for example, information about Russian cultural events in India with shows, dates, times, venues and a calendar of all these activities.

I am always very keen to hear about different Russian regions, to learn about their culture and what they are famous for. Recently I’ve been watching a fantastic National Geographic series called Wild Russia.

I am amazed to see how beautiful Russia is as a country. I will consider myself very lucky if I ever get a chance to see all these places in my lifetime.

But until that happens,YOU are my window to this beautiful country. Please accept my thanks and congratulations. Good work!

As an OAP, I read the story“Pensioners hold the key to revival,” in your November issue, with intense interest. Praise God, the Putin administration commits to raise pension payments to those who have done their bit for the motherland.

AJAY BOTHRA NEW DELHI

GARY MASON LONDON-YEKATERINBURG

LU UNITED KINGDOM

The ultimate Russian comfort food All Russian food is delicious, but my favourite is Solyanka! For those who don’t know, that’s a savoury soup made from cabbage, tomatoes and different vegetables and meats.

Please keep up the good work and educate the rest of the world about Russia, its people and wonderful culture!

ports from three of the world’s poorest countries – Cambodia, Bangladesh and Pakistan – are respectively 16.7 pc, 15.3 pc and 9.9 pc, while the rates imposed on the UK and France, two of the world’s richest countries, are 0.6 pc and 0.8 pc.

As these prohibitive tariffs undermine poor countries’ growth efforts, they help ensure the walls remain thick and high.These are among the iniquitous walls that the WTO Doha Development Agenda was supposed to eradicate. However, after being launched in 2001, it remains totally bogged down with little prospect of conclusion in the foreseeable future. Not only are old trade walls not coming down, there are signs that new ones are being constructed.

Walls are by no means limited to geography and economic status. More than 60 years since Partition, the wall between India and Pakistan remains almost impenetrable (except to intrepid smugglers!). There is only one rather desolate

border crossing, theWaga Border. In spite of professing unity, citizens in the 22 members of the League of Arab States find many walls in seeking to cross between member states. And there is the wall that isolates Palestinians.

There are multiple walls separating different ethnicities, religions and language groups. Also, though recent decades have seen improvements in the condition of women, there remain thick walls between genders.As civilization advances, freedom of choice for the majority of individuals – how they live, where they are educated, where they work – must become a constant goal. Thus individuals should retain the choice to live behind walls, if they wish, but there should be no case of being forced to. Until women throughout the world are given this freedom, gender-walls will stand out as an indictment of humanity.

Looking to the future, one can already see the spectre of climate change is erecting new walls between states. Not only does this apply to the politics and negotiations of climate change, but it will even be important for those vulnerable countries that will experience – or are already experiencing – the consequences, and those that see it as a distant speck on a very remote horizon.

Walls will soon be going up to keep out climate change refugees.

What are the implications for global business leadership?

The general forte of business has been to go around the walls.The BerlinWall notwithstanding, many astute companies managed to do great business in the Soviet Union. The same applied in South Africa during the decades of apartheid; ingenious ways were found to continue business.

Japanese businessmen, for example, even accepted the humiliation of being labeled“honorary whites”! Going back further into history, business was also of course able to draw benefits from the labour found behind the walls of Nazi concentration camps.

Business philosophy has accepted the reality of the walls – they call it“pragmatism”.As we are well into a new century, and are able on occasions such as the Berlin Wall anniversary to reflect on where we have come from and where we are going, it behooves business leaders to think differently about walls, to envisage being part of the destruction crews and relinquish their erstwhile position of propping up walls.This is not only because it is responsible and ethical, but also because it is the only way to ensure our survival.

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Jean-Pierre Lehmann is a Professor of International Political Economy at IMD, a leading global business school in Lausanne, Switzerland.

Questions?

Opinions?

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All articles and letters appearing on the pages 12-14 do not necessarily reflect the opinions and views of the editors of Rossiyskaya Gazeta and Russia India Report.

This issue has been conceptualised by INTERNATIONAL MEDIA MARKETING, RESPONSE adqueries@timesgroup.com Co-ordinator: • Feature Mehernosh Gotla (mehernosh.gotla@timesgroup.com)

BOOKMARKS

www.roscosmos.ru Russian Federal Space Agency www.ln.mid.ru/brp_4.nsf/english Ministry of Foreign Affairs documents www.cdi.org/russia/johnson Johnson’s Russia List

RUSSIA INDIA REPORT

Opinion

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

CONSERVATIVE MODERNISATION SERGEI MARKOV STATE DUMA DEPUTY

After United Russia held its convention in St Petersburg on Nov. 20-21, in which“Russian Conservatism” was the main motto, skeptics have been questioning whether conservatism is compatible with President Dmitry Medvedev’s modernisation programme. In my opinion, the two can be combined quite easily.

Countries adopt their own types of modernisation programmes based on their own specific political culture, values and history. In Britain and the United States, for example, economic development was driven by liberal modernisation. But that approach will not work in Russia. If the country opens its economy too much to foreign players, it would be highly detrimental to domestic producers and could lead to the loss of Russia’s sovereignty. Stalinist modernisation is also not an option for the country, because the human cost would be too high.

But Russia could look to the conservative mod-

ernisation model of Germany’s Christian Democratic alliance after World War II, the traditionalistic Liberal Democratic Party in Japan or the Christian Democratic Party in Italy. Russia can also look at its own history and conservative modernisation under Tsars Alexander III and Nicholas II. Conservative modernisation is attractive to Russians for many of the same reasons that a conservative investment strategy is attractive to conservative investors. They both provide stable growth with minimal risk.

Russia’s history is filled with revolutions. PostSoviet Russia categorically rejected communism.

Communist Russia categorically rejected the Russian Empire and tsarist Russia. And tsarist Russia categorically rejected the Grand Duchy of Moscow. But Russian conservatism defends the country against another revolution by focusing on preserving the country’s traditional values: stability, law and order, and the importance of family-based morality and religion.

Russia’s conservative tradition also includes a

strong state and national identity, as well as the importance of preserving the country’s sovereignty. The state plays a particularly important role in providing national unity and in resolving conflicts between different social groups and classes because it acts as the arbiter and protector of the national idea.

From the conservative perspective, socialist doctrines lead to too much confrontation between various classes and social groups, whereas liberal doctrines lead to conflict between the interests of individuals and society as a whole. By contrast, conservatism helps unite these groups. Russian conservatism is still in the process of more clearly formulating its principles on human rights.The Russian Orthodox Church, under the leadership of Patriarch Kirill, may play a key role in defining these principles. The church is attempting to link human rights with morality, uniting them in the concept of a person’s inalienable rights and human dignity.

But United Russia and the country’s leaders cannot focus only on these exalted values.They must

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offer concrete solutions to concrete, everyday problems.The economic model of Russian conservatism needs to be further developed,but it should build on previous centrist policies and the firm leadership of Prime MinisterVladimir Putin as the head of United Russia. Putin’s conservative values include the ideas of order, law, moral legitimacy, family, property ownership and religion.

After living through the chaotic 1990s, it is understandable why Russians seek comfort in the conservative model.They are tired of endless political instability and economic crises. Now, the country must adopt a modernisation programme to develop society.With its backwardness, internal conflicts and enormous territory, Russia might not survive the struggle for resources against other major powers that have long ago formed and strengthened their development models.

Now Russia must decide on its own model for conservative modernisation and devote the necessary resources to build it.

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Sergei Markov is a State Duma deputy from United Russia First published in The Moscow Times

NUCLEAR-POWERED SPACECRAFT? YURY ZAITSEV RIA NOVOSTI

At its recent meeting, the Presidential Commission for Modernisation andTechnological Development of Russia's Economy called for developing a transport-energy module with a megawattclass nuclear propulsion unit.

President Dmitry Medvedev approved the project and promised to find funding for it. Analysts say Russia could restore its status as a leading space power if it scores a breakthrough with nuclear propulsion.

Past experience shows that such expensive technology is extremely difficult to develop.The United States and the Soviet Union tried hard to make commercial nuclear propulsion units.The USSR came up with the 11B91 experimental nuclear engine, while the United States developed the NERVA (Nuclear Engine for RocketVehicle Application) system with a thrust of about four tons.

In April 1964, a US Navy Transit navigation satellite with a radio-isotopic generator on board, failed to reach orbit and disintegrated in the atmosphere, spewing out over 950 grams of pluto-

The polls Half of all Russians questioned don’t know who built the Berlin Wall RUSSIANS WERE ASKED WHETHER THEY REMEMBER WHY THE BERLIN WALL WAS ERECTED AND BY WHOM. THE OLDER GENERATION HAS A CLEARER UNDERSTANDING OF THIS HISTORICAL PHENOMENON. WHO ERECTED THE BERLIN WALL?

SOURCE: WWW.WCIOM.RU

nium-238. This was more than the total amount of plutonium released during all nuclear explosions by 1964.

In January 1978, Kosmos-954, a Soviet Radar Ocean Reconnaissance Satellite (RORSAT) with a nuclear reactor on board re-entered the atmosphere. After the satellite's reactor core failed to separate and propel it into a nuclear-safe orbit, it fell in Canada, contaminating 100,000 sq km of its territory. In February 1983, the nuclearpowered Soviet satellite Kosmos-1402 went down in the South Atlantic.

The most serious threat involved Cassini-Huygens, a joint NASA/European Space Agency/ Italian Space Agency robotic spacecraft mission, currently studying the planet Saturn and its many natural satellites, that was launched on October 15, 1997 and which made a gravitational-assist flyby of the Earth on August 18, 1999.

The spacecraft, which had a nuclear reactor with 32.7 kg of plutonium-238, passed only 500 km above the Earth. Up to five bn people could have got radiation poisoning had the spacecraft plunged into the atmosphere.

On February 10, 2009, the Iridium-33 telecommunications satellite owned by US company

Iridium Satellite LLC and its defunct Russian equivalent, the Kosmos-2251 with a nuclear propulsion unit, collided over northern Siberia.This resulted in potentially hazardous space debris.

At present, 30 Russian and seven US spacecraft with nuclear systems on board are orbiting the earth at 800-1,100 km altitudes, where similar collisions can take place.This provides for 40 potential nuclear explosions.

If any of these satellites collide with debris, they will slow down and eventually re-enter the atmosphere, spreading radiation above the Earth and on its surface.

Since the 1978 Kosmos-954 crash, the Scientific and Technical Subcommittee of the United Nations Committee on the Peaceful Uses of Outer Space has always focused on the use of spacebased nuclear reactors.

Its survey formed the basis for the UN General Assembly's December 1992 resolution entitled "Principles Relevant to the Use of Nuclear Power Sources in Outer Space".

According to the resolution, nuclear reactors can be used in outer space only when their usage is absolutely indispensable and after their mission is fulfilled, the spacecraft equipped with nuclear

reactors should be placed on sufficiently high orbit. "The sufficiently high orbit must be such that the risks to existing and future outer space missions and of collision with other space objects are kept to a minimum."

At the turn of the century, part of the international scientific community decided that it was impossible to explore outer space without nuclear engines and reactors, which could be used to accelerate interplanetary spacecraft and to supply them with energy.

Scientists must find a way to ensure the radiation safety for nuclear propulsion units and the case of possible accidents. This problem has proved to be extremely difficult to resolve, unlike similar work on the reliability of nuclear reactors. Moreover, nuclear rocket engines emit powerful jet streams of radioactive exhaust, making it impossible to test and upgrade them on Earth.

Consequently, it is still unclear whether interplanetary spacecraft should be fitted with nuclear rocket engines or solar-powered electric propulsion units.

More than half of all Russians polled said they have no idea who built the Berlin Wall.

Almost 24pc of Russians are aware of the fact that the Berlin Wall was constructed by the USSR and the German Democratic Republic. They include middle-aged Russians and residents of big cities.

Ten pc of Russians are confident that Germany alone built the wall, while 6pc think that it was Western allies and the Federal Republic of Germany. Four pc believe the wall was a bilateral initiative of the USSR and Western allies.

The Wall, which was built in part to stem East German emigration and wall off their brain trust, was also constructed to avoid Western interference.Those Russians who understand the genesis of the wall are primarily elderly citizens and metropolitan residents. Other Russians thought the wall was built as a preventive measure to avoid conflict and the resurgence of fascism. Half of respondents know nothing of the purpose of the Berlin Wall.

Most Russians believe their country needs genuine political opposition

While living standards have improved – hence the government’s popularity – the electorate has matured and people are dissatisfied with elections, says political analyst Dmitry Oreshkin.

Some analysts believe that the parties most people see as“opposition”are in fact controlled by the Kremlin.“In 2002, the country was not as stable as it is now, and many feared that a strong opposition could cause turmoil,”comments Alexei Makarkin, deputy director general of Moscow think tank, the Centre for Political Technologies.

He added that today’s opposition is radically different from a few years ago.“They are part of the system… it is hard to imagine the Communist Party or LDPR as threats to stability,” he observes.

Recent actions by the Communists, LDPR and A Just Russia – walking out of parliament during the discussion of the October 11 election results – did nothing but demonstrate the opposition’s true ambition: to get a share of power, says Konstantin Simonov, president of the Centre for Current Politics.

MORE THAN 70PC OF RUSSIANS SAY THAT THE COUNTRY NEEDS AN EFFECTIVE POLITICAL OPPOSITION. THIS NUMBER HAS BEEN GROWING STEADILY SINCE THE EARLY 2000S. DOES RUSSIA NEED A REAL POLITICAL OPPOSITION?

SOURCE: WWW.LEVADA.RU

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Yury Zaitsev is an academic adviser with the Russian Academy of Engineering Sciences

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BOOKMARKS

RUSSIA INDIA REPORT

Reflections

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

www.online-literature.com/anton_chekhov Chekhov's bio, plays and short stories http://chekhov2.tripod.com/ 201 stories by Anton Chekhov

A legacy to rival the mastery of Shakespeare Chekhov’s unique literary talent still lives today Of all great Russian writers, perhaps Chekhov, is bestloved. Unlike Tolstoy and Dostoevsky, he did not attempt to solve problems of existence or grapple with world history, nor did he have an axe to grind about how to live. As Dr Zhivago says in Pasternak’s novel, Chekhov was far too modest for such weighty matters. He was content to remain an artist and focus on individual issues, many of which are now of wider concern.To borrow Pasternak’s image, they continue to acquire sweetness like ripening apples. The universal appeal of Chekhov’s work has increased – he is now the second most-performed playwright after Shakespeare and writers of short fiction regard him as their guiding light.

Chekhov’s popularity also stems from a lack of pretention. As the son of a shopkeeper, he never planned to become a famous writer: he set his sights on a medical career. But comic talent enabled him to earn money for his impoverished family. As he was invited to more prestigious publications, his literary “mistress” began taking over from his medical “wife,” but he never forgot he had entered through the back door.

The practical objectivity he acquired from medicine, meanwhile, became the cornerstone of a pared-down literary style notable for simple vocabulary and a complete lack of artifice.“Medical science has had a strong influence on my literary activities,” he acknowledged towards the end of his life;“it significantly enlarged the scope of my observations.”The combination of carefully-shaped stories with tragicomic, sympathetic characters partly explains his continuing hold on us.

Chekhov’s understated works continue to enjoy worldwide appeal because of the universality of their subject matter.

Chekhov was Russian through and through, but the problems of human interaction he explores transcend national boundaries.

He wrote stories and plays about characters people can relate to. They are not largerthan-life personalities confronting extreme situations, but ordinary people with ordinary problems. As Chekhov reminds us, self-deception is far

more frequently encountered in our lives than fulfillment of our dreams.“My goal is to kill two birds with one stone,” he wrote in 1889;“to paint life in its true aspects, to show how far this falls short of the ideal life. Ideal life is unknown to all of us.” Chekhov saw clearly what prevents people from finding happiness, but had a unique talent for articulating it in a gentle, compassionate way. He gained understanding by coming into contact with a wide cross-section of people – as a doctor and a writer – and partly due to having to confront mortality at a young age.

He could not hide the truth when he started spitting blood at 24; it was unlikely he would

ALEXANDER MELIKHOV RIR

Chekhov’s plays have graced the Russian stage for over 100 years and world stages for slightly less than a century.

What is the secret of their charm?

The brilliant Tolstoy, who sincerely loved Chekhov, said once, as they embraced on parting:“I still don’t like your plays.

Shakespeare’s plays are bad enough, but yours are even worse.”Tolstoy found Shakespeare guilty of exaggeration, philosophical maxims and unlikely scenes that destroyed the credibility of his characters and situations. But distinguished literary critics at the end of the

“Chekhov’s popularity stems from a lack of pretention – he never planned to be a famous writer.”

Chekhov’s modest, cultivated characters – doctors, teachers, etc. – are the real heroes of our time.

reach old age. But his infectious sense of humour and unerring sense of irony prevented his writing from ever becoming too sentimental, despite its note of elegy. The dramas which unfold in his stories and plays, with their muted climaxes, are rarely melodramas, and have the deceptive feel of real life.

In his exquisitely subtle handling of the absurdity and tragedy of human existence, Chekhov was way ahead of his time. His contemporaries were bewildered by apparently plotless stories and plays with inconclusive endings.

Nothing seemed clear-cut, but it was this ambiguity which most excited writers who recognised his mastery when English translations appeared.

“Chekhov is not heroic, he is aware that modern life is full of nondescript melancholy, of discomfort, of queer relationships which beget emotions that are half-ludicrous and yet painful, and that an inconclusive ending for these impulses is much more usual than anything extreme” – this was Virginia Woolf writing in 1918, but it could have been the early 21st century. Chekhov’s pathos and irony resonate with our lives today. Have we finally caught up with him?

19th century accused Chekhov of just the opposite.

One should recall that when Chekhov was young, Dostoevsky was still alive and dreaming of bringing church and state together, still instructing Russians about the great historical mission of world sympathy: to understand and love the truth of all people more deeply than they themselves.

Moreover, Chekhov had already written everything he was to write by the time Tolstoy was roaring about reorganising Russian life according to the laws of early Christianity.

In the theatre, symbolist dramas were the order of the day – Ibsen, Maeterlinck – with grandiose metaphors and sweeping statements about world problems. Quasi-realistic prose tried to keep pace.

Maxim Gorky in his recalcitrant tramps hinted at a Nietzschean superman, and in his sensible workers, he was calling for revolution. Leonid Andreyev tried to combine Realism with Symbolsim – running ahead of future plays by the existentialists (Sartre, Camus, Anouilh).

Everything was bubbling and glittering, there was promise of unheard-of changes, unprecedented revolts. Enter Chekhov, who promises exactly nothing, whose subject is the rather cheerless (but not horrifyingly so) life of not overly happy (but not horribly unhappy) people.

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Rosamund Bartlett is a renown Chehkov scholar and translator

ITAR-TASS

ROSAMUND BARTLETT SPECIAL FOR RIR

The year 2010 will no doubt be the year of Anton Chekhov, at least in the theatrical world. Most drama theaters will certainly celebrate the 150th anniversary of the birth of this writer whose famous plays – such as Uncle Vanya, The Seagull and The Cherry Orchard – continue to be staged around the world without respite, more than a century after they premiered. “In the galaxy of great European playwrights who were Ibsen’s contemporaries, Chekhov shines as a star of the first magnitude, even beside Tolstoy and Turgenev,” wrote Bernard Shaw.

The reasons for Chekhov’s enduring popularity are discussed here by Chekhov scholar Rosamund Bartlett and writer Alexander Melikhov.

The depiction of simple lives as a high art form

RIR Dossier: Anton Chekhov Chekhov was born in Taganrog on January 17, 1860. He was the son of a grocer and the grandson of a serf who bought his freedom. After school, Chekhov enrolled in the Moscow University, eventually becoming a doctor. While practicing medicine in 1886, he contributed to St Petersburg daily Novoe Vremya and it was during this time that he developed his dispassionate, non-judgmental style.

In 1892, Chekhov bought an estate in the village of Melikhove and started writing full-time. During this time, he published some of his most memorable stories.

In 1897, he fell ill with tuberculosis and moved to Yalta on the Black sea. Chekhov wrote extremely quickly, often producing a short story in an hour or less.

Chekhov died of pulmonary tuberculosis on July 2, 1904, in Germany.

People who rise enough above their milieu to realise they are lonely, but not so lonely as to become heroes or leaders.

The world would have to live through the First World War and its disappointments in many dusty chimeras, it would have to witness unheard-of changes and unprecedented revolts in order to appreciate Chekhov’s principal discovery: a normal, not overly happy humdrum life is the most we can expect. In the world there are no trifles, everything is filled with significance; all you have to do is study it and recount what you see in Chekhov’s precise and ascetic language. In the 1960s, when the sophisticated Soviet reader was going crazy over subtexts in Hemingway, noticing that even the most trivial exchange was filled with a mysterious depth if inserted into prose or drama, for me, it was only an echo of Chekhov.

Hemingway himself considered the “intelligent doctor” one of his teachers. (Chekhov also taught Dreiser, Sherwood Anderson, Fitzgerald and Thomas Wolfe). But Hemingway with his minimalist means glorified the courage and staunchness that are required only in extreme situations, whereas Chekhov poeticised ordinariness; with a sad compassion, he portrayed the everyday life of the nice, not overly decisive person – and that person repaid him with love and gratitude. Chekhov loves us without demanding anything.

The turn of the 20th century was a time of appallingly exaggerated demands, in comparison with which everyday pleasures and virtues seemed gray and lacklustre. But the 20th century itself brought so many disappointments in its panacean chimeras and people were so surfeited with changes and revolts that Chekhov’s “spineless,”“non-ideological” characters began to be viewed as“positive heroes”.Chekhov’s modest and cultivated characters – the doctor or the teacher, the librarian or the engineer who is not obsessed with any grand dream, but is honestly bearing his burden from one day to the next – are the real heroes of our time.

We have taken a different road from utopians like Tolstoy and Dostoevsky. Today, Chekhov turns out to be the civilized man’s best companion.

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Alexander Melikhov is a writer from St Petersburg.

BOOKMARKS

visitnovgorod.com The user-friendly tourist office www.novgorod.ru/english The city’s web portal www.novgorod1150.com Website dedicated to the city’s 1,150-year anniversary

RUSSIA INDIA REPORT

Travel

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

Novgorod A city famed for its heritage and independent spirit

PHOEBE TAPLIN RIR

Present-dayVeliky Novgorod,or “Great”Novgorod,is a quiet,unspoilt place with its broad river and autumnal avenues.The surrounding countryside is easily accessible and is studded, like the town,with tall churches.Visitors who appreciate the beauty of simplicity are drawn to the whitewashed walls of these holy

The Millennium of Russia – a bronze monument in the Novgorod Kremlin. It was erected in 1862 to celebrate the millennium of Rurik's arrival to Novgorod, an event traditionally taken as a starting point of Russian history.

places. Inside, many of the old frescoes have been restored; outside, the flat marshlands, woods and water meet the sky.

Novgorod was always ethnically diverse and rivalled medieval Venice in its far-flung trading links. Today, there are international events almost every month and no doubt they will be partying again in three years’ time to celebrate the anniversary of Varangian Prince Rurik’s official founding of the city in 862. The Rurik dynasty was to rule for the next seven and a half centuries.In 1862,a huge bronze monument was forged to celebrate the“Millennium of Russia”.

Three hundred tons of metal have been wrought into more than a hundred figures.

Novgorod first became a free city, independent of ruling Kiev, in 1019, underYaroslav theWise, who built the Cathedral of St Sophia and established Russia’s first school.Novgorod adopted Christianity at the end of the 10th century and soon became a powerful centre of orthodoxy.

Built in 1045,beautiful St Sophia is the oldest surviving stone church in Russia. It resides inside the fortified

ARKADIY KOLYBALOV_RG

“Russia’s oldest city, cradle of Russian democracy, medieval centre of trade and crafts…” This is how Veliky Novgorod’s tourist centre describes the historic town, which recently celebrated its 1,150-year anniversary. In 859, a fortress was first recorded here, at a key point on the trade route that ran from the Baltic to the Mediterranean, linking Scandinavia with the Byzantine Empire.

No other Russian or Ukrainian city can compete with Novgorod in the variety and age of its medieval monuments

ALEXANDER NIKOLAEV_INTERPRESS_ITAR-TASS

History’s great survivor

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Facts about Veliky Novgorod

Novgorod (population 215,000) is on the M10 federal highway connecting Moscow and St Petersburg (590 km from Moscow and 190 km from St Petersburg). The city lies along the Volkhov River just below its outflow from Lake Ilmen.

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Kremlin (kremlin - a Russian fortress), or“Detinets”as it was known locally. The name Novgorod (“New City”) is strangely ironic in the context of so much superlative ancientness.The onion domes that give the cathedral its characteristically Russian look were actually added later, but the architecture of this building has become evocatively symbolic of the city’s ancient heritage.

The icon the Virgin of the Sign, to the right of the holy doors inside the cathedral, is supposed to have saved the city in 1170.

The besieging army from Suzdal was plunged into darkness after an arrow hit the icon (a scar does exist above theVirgin’s eye).The battle itself is commemorated in another famous icon, the first to depict a historical scene: The Battle between the Novgorodians and the Suzdalians is in the Novgorod Museum, where you can admire icons from the 11th century onwards.

In the 12th century, Novgorod became a republic ruled by a “veche”assembly, which could vote the princes in or out. Historians debate how free this early democracy really was, but the republican traditions of trade, literacy and cultural exchange certainly produced a flowering of art and music. Jewellery, manuscripts, woodcarvings and epic songs are celebrated in the museum’s new exhibition.

Across the river from the Kremlin,Yaroslav’s Court c o n t a i n s s e ve r a l o l d churches, but very little from its earliest days of

One of most ancient Eastern Slavic cities, Novgorod was first chronicled in 859. It was a large trade centre on the route from the Baltics to Byzantium. Novgorod ruler Oleg captured Kiev and founded the Kievan Rus state in 882.

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wooden palaces.A bronze sculpture of Rurik, arriving by boat, and a granite circle, with shields of the Hanseatic countries, have been opened this year next to the 17th-century trading arcade on the bank of theVolkhov.

Novgorod’s old marketplace has seen countless uprisings among the literate and independent peasantry.Full serfdom,as practised elsewhere in Russia, never took hold in Novgorod and,even today, there is a refreshing sense of independence about local government initiatives. Academic Nicolai Petro, whose book Crafting Democracy explores the potency of what he calls the“Novgorod myth”,argues that the area’s economic

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success, international links and political innovation have been fostered by“the local cultural tradition”.

The city’s infrastructure is certainly impressive. The streets

Veliky Novgorod was described as the “source of Slavic liberty and Russian freedom”. are swept and signposted, the parks are green and peaceful and the English-speaking Krasnaya Izba tourist office is helpful and polite.Tourism is among

Novgorod’s unique preservation plan Although medieval Novgorod is hidden under an asphalt coating and the buildings of the presentday city, local geological and climatic conditions make an almost perfect environment for the preservation of artefacts.

The deep cultural layer (up to 8-9 metres) in Novgorod holds entire neighbourhoods dated to the 10th-15th centuries, in the form of log buildings and wooden pavements. These archaeological monuments constitute the bulk of the historical and cultural heritage of Novgorod.

One of the foremost archaeological findings, the birch bark letters of Novgorod enabled historians for the first

Novgorod is the birthplace of Russian democratic and republican traditions. The Novgorod Republic appeared in 1136 and existed until 1478.

Among the largest states of medieval Europe, the Republic ran from the Baltics to the Urals.

time to gain insight into the everyday life of the medieval city folk, their trade, land and interpersonal relations, as well as the Novgorod dialect of Old Russian: to date, 950 texts have been found.

The unique nature of the archaeological monuments of Novgorod make preservation of its cultural layer a matter of paramount concern. For this reason, in 1969, Novgorod became the first city to have the cultural layer of the city officially protected by the government.

In 1992, the historical centre of Novgorod received recognition as a UNESCO World Heritage Site.

the industries that have benefited from links with other countries and foreign investment. Petro argues that the city’s success has been due to “astute usage of local historical symbols…”He quotes the message inscribed on a wooden plate from Veliky Novgorod which, roughly translated, describes the city as the“source of Slavic liberty and Russian freedom”.

After countless invasions and attacks, being razed by Ivan the Terrible, and systematically ravaged by the Nazis, Novgorod stands proud again. “Lord Novgorod the Great” was its medieval title.The city’s incredible collection of churches from eight centuries has been turned into a series of museums. Frescoes by the 14th-century Byzantine artist Theophanes the Greek have been uncovered in the the Church of the Transfiguration of Our Saviour, at the end of the leafy Ilyina Street.

The vibrant colours of the murals in the Cathedral of Our Lady of the Sign, next door, are less historically exciting, but equally beautiful.The St George Monastery to the south, among the marshes that made the city inaccessible to rampaging Tartars, is still a working monastery. Nearby, the Vitoslavitsy Museum of Wooden Architecture has restored buildings from across the region, ranged picturesquely on the shore of the Volkhov River. In the distance, you can see the ruins at Gorodische, Rurik’s abandoned city, across the widening river and waving reeds.

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Feature

IZOSOFT.RU

ITAR-TASS

Russian cuisine is abound with delicious dishes for all tastes, which we frequently feature in the monthly food column. Our new year selections are listed here; you can find all these recipes and more online at

FOTOLIA_PHOTOXPRESS

Favourite dishes for the holiday dinner

FOTOLIA_PHOTOXPRESS

Recipes

www.expat.ru The virtual community for Englishspeaking expats www.diningguide.ru Find more than 300 Moscow restaurants

BOOKMARKS

RUSSIA INDIA REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009

RED SQUARE RESTAURANT

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Salad Olivier

Mushroom Julienne

Herring under a fur coat

Pickling tomatoes

Tapas, Russian-style

This salad is the most traditional dish for New Year celebrations in Russian homes.

Mushrooms have a special place in Russian culture. Julienne is a standard appetiser for any holiday dinner.

Probably the most popular Russian salad, this dish can deceive the eye – from afar it looks vaguely cake-like.

Russians are used to pickling everything from garlic to watermelon. Tomatoes are an old favourite.

Russia is an appetiser goldmine – a delicious, uniquely Russian class of food is called “zakuski,” or little bites.

ity and prosperity, is justified.

There are well-smoked sprats, slices of white fish and red caviar served on boiled eggs that have been sliced in half.

Pirozhki, small stuffed pies that are a standby of any Russian table, are here in full force, filled with meat, potatoes and cabbage. And of course, there are the good friends of any vodka drinker – pickled cucumbers, mushrooms, tomatoes and garlic – the perfect thing to pop into your mouth after a shot of the hard stuff.

Traditionally, southern Russians have preferred to serve pork as the main course on New Year’s Eve – pigs burrow with their snouts, pushing forward into the future in their search for food. Their northern brethren, however, serve fowl, not frightened at all by the southern superstition that a winged animal may cause one’s luck to fly away.

To please both traditions, it’s possible to include both a suckling pig, complete with the rich brown glaze that comes from frequent and careful basting, and a roasted goose with baked apples.

There are also several cakes, including napoleon, a New

Year’s must-have, juices and mors, a Russian drink made from berries. Mandarin oranges abound, a Soviet tradition no one can really explain. Surprisingly, however, there is often no vodka on the table – it is in the freezer, waiting to be served ice cold when festivities begin.

And begin they do. As soon as the guests are sitting, the vodka comes out and the toasting starts. Russian toasts are a spontaneous, informal affair, but a few are mandatory.You drink to the old year with the hope that everything good that happened in it will continue into the future, while anything bad should stay in the past. Parents, kids and good friends get a mention as well.

Before you know it, the television is showing the Kremlin clock tower striking midnight and the president is congratulating the country. Following careful instructions, everyone writes out a wish on a piece of paper, sets the paper on fire and drops its ashes into one of the glasses of champagne being passed around.

The rest of the night is a blur – everyone goes outside to shoot off fireworks, followed by some singing and a snowball fight, and then back to the table.

What gives comfort to your aching head, however, is the thought that there is nowhere to hurry to – all of Moscow, and the rest of the country as well – will be nursing the same hangover.

And when the hangover is gone, there are ten more days of vacation to do it all again.

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Cuisine The festive season never fails to provide heavenly meals

A grand dinner for a big day Picture this... It’s December 31 – you’re about to experience New Year’s Eve in Russia for the first time. This is the country’s favourite holiday, usually followed by a 10-day break at the start of January when the whole nation takes it easy.

Sound like a good idea to you?

IRAKLI IOSEBASHVILI SPECIAL FOR RIR

ished when the Soviets came to power in 1917 but came back in 1938, pushing Christmas – with its un-Soviet religiosity – off the calendar.

The smells in any Russian home on NewYear’s Eve are wild, diverse and very promising. Long tables take over whole apartments, every inch taken up by plates bearing food of just about every description – some familiar, others completely alien.

First, there are the salads.

Salad Olivier – potatoes with finely chopped eggs, carrots, pickles and ham mixed with mayonnaise – is there in all its glory. Russian styleVinaigrette, where beets and potatoes play the starring role, also makes an appearance. These two share the table with the poeticallynamed “herring under a fur coat”,where the fish is wrapped in a“fur coat”of grated beets,

potatoes and carrots – another holiday classic.

Cold meats are everywhere: thick slices of ham, smoked sausages replete with big white spots of fat and, of course, meat in aspic, or “kholodets”,a dish which is made by painstakingly boiling down bones over a day or two to achieve a gelatinous mass. This dish is eaten with horseradish and makes for a great companion to a shot of chilled vodka.

Fish and vodka are a Russian classic as well, hence the presence of pink, thinly sliced smoked salmon, pickled herring complete with crunchy onions, as well as sturgeon, which traditionally represents stabil-

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In Russia, NewYear’s celebrations are longer than most countries.There’s a certain lightness in the air, only enhanced by freezing temperatures. People walk with extra purpose, carrying shopping bags or bouquets of flowers. Some, however,are walking with no purpose at all, and a few are even lying in the street.

These are the ones who started celebrating early.

Russians start thinking about NewYear’s plans as

early as September.It is the most important day on the calendar, trumping all other holidays and even birthdays and anniversaries. This is probably a result of the Soviet calendar, which bumped traditional holidays in favour of ones that evoked more cynicism than celebration – International Day ofWorker Solidarity, for example. But New Year’s Eve – the only one of the eight public holidays not tied to communist imagery – was different, a day everyone could be merry without paying lip service to workers, tractors and the class struggle.

Russia has not always marked the New Year on January 1.

Winter was a trying, deadly time, with often nothing to celebrate until spring, when the worst was over. But old traditions would change with Peter the Great, who set January 1, 1700 as the date marking the country’s switch from the Byzantine calendar to the modern one.The holiday was abol-

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