Dec 2009, Russia&India Report

The fi ght for people’s savings

Battle of the banks

P.02 P.11 P.14

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

P.15

A direct way to air your views

Anton Chekhov’s artistic legacy

Blogosphere heating up

Literary legend turns 150

A Business Report from The Economic Times

In association with Rossiyskaya Gazeta

RussiaIndiaREPORT

...Marching towards a common future

THE ECONOMIC TIMES

MUMBAI ● NEW DELHIWednesday, December 09, 2009

Moscow: Europe’s new bridge to Asia

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Moscow’s airports are not what they used to be. Exposed to the pressure of the market econo-my and tough competition, their design, service and logis-tic systems have undergone a transformation. With the in-frastructure updated, prepa-rations have begun for the next stage, which will eventually see Moscow’s aviation hub en-tering the global competitive market.The impressive growth rate of the Chinese economy, despite the crisis, combined with grow-ing domestic demand, promis-es future expansion of the tran-sit flow between Europe and Asia.

Recruiting the elite for the future

This agenda will determine Russia’s policy for the next few years, up until the 2012 presidential elections. However, experts are con-fused by the disparity be-tween Medvedev’s plans and his cautious approach. Some see this as weakness and lack of independence, while oth-ers say he is abusing his po-sition to enhance his politi-cal image. Neither explana-tion reveals the president’s true strategy.Of course, many prefer to think in policy terms. This opinion is typical of those calling for speedy democrat-isation, including radicals willing to liberalise every-thing 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, Med-vedev can create a new pub-lic atmosphere to promote his agenda. A new Civil So-ciety 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 judg-es suspected of corruption were forced to resign, giving hope for positive changes in Russia’s judicial system.

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.

EPSILON

CONTINUED ON PAGE 3

Stem cells to the rescueTucked in behind a gleaming glass-and-steel tower in south-ern Moscow are the headquar-ters of Gemabank, Russia’s first cryogenic storage unit that keeps stem cells from newborn babies’ umbilical cords on ice. It may sound like science fi ction, but this busi-ness practice is well estab-lished in the West. Gemabank offers Russians a kind of genet-

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 ARISSPECIAL FOR RIR

ic insurance policy. Western hospitals routinely offer to freeze these dynamic and ver-satile 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, Rus-sia’s commercial biotech com-pany, Human Stem Cells Insti-

tute (HSCI), has more or less created the market on its own. HSCI will launch Russia’s fi rst post-crisis initial public offer-ing (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 recov-ered 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-

covering to fi nish this October at 1348. Anyone brave enough to invest in the midst of the fi restorm has been handsome-ly rewarded, but for the ma-jority of investors, the water is still cold. Is it not too early for an IPO?“Not at all! Confi dence is re-turning and we will have no competition to speak of,” says the general director, Artur Isaev, sitting in his modest of-fi ce at the mini-campus of the Institute.

GREG BAKER_AP

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.

IRINA SUKHOVA, VIKTOR KUZMINRIR

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

BOOKMARKS02 RUSSIA INDIA REPORT

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009Economy

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

Bank wars threaten state supremacy

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 fall-en 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 report-ed pre-crisis that up to a third of its sales were paid for using bank credits.Russia’s banking sector re-mains dominated by the state-owned retail giant Sberbank, which is three times the size of its nearest rival, another state-owned giant – VTB Bank. How-ever, in recent years, Sberbank’s near monopoly of retail bank-ing has been whittled away by the rise of commercial banks –

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

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

MAXIM BUILOV RIR

Money Russian customers have an increasing choice on where to stash their cash

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 2011-2012. The floating out cer-emony was attended by senior officials. “India’s consul gen-eral 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 tra-dition,” 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 mis-sile system, two Kashtan air-defense gun/missile systems, two twin 533-mm torpedo launchers and an anti-subma-rine warfare helicopter.RIA Novosti

News in brief

Russia floats out frigate for Indian Navy

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 con-firm the BRIC’s status as an emerging leader in the world economy. Itar-Tass

Russian stock market leads in growth

By 2030, Russia will invest $609-625 bn in its oil industry, according to an Energy Strat-egy endorsed by the govern-ment. Out of this sum, $491-501 bn will be channelled in explo-ration and $47-50 bn in refin-ing. 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

Production forecasts predict increases in oil, gas and coal

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

clerks that have been Sber-bank’s hallmark can’t compete with the brightly lit and high tech offices of leading commer-cial 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 se-riously interested in 2007 when a wave of mergers and acquisi-tions 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 pre-mier 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 Rus-sia’s Far East, Expo was a tiny regional operation on the bor-der 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 back-ground can be seen on cash ma-chines across the country. “If you want to know how com-mitted 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 re-mains wide open and, surpris-ingly, the average Russian is a much better credit risk than the average European. Because everyone was simply given their apartment following the col-lapse of the Soviet Union in 1991, Russians have almost no debt.“It is hard to gauge the value of

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 Renais-sance 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 piec-es. After setting up a rep office, it launched a greenfi eld retail bank called Banque Société Générale Vostok (BSGV) sever-al years ago and then bought Russian niche players like the leading consumer loans opera-tions RusFinance and Delta-Credit. However, three years ago, Soc-Gen caught acquisition fever and paid $2.33 bn to oligarch Vladimir Potanin to take con-trol of Rosbank, at the time the biggest private bank in Russia and still a top 10 player. Ana-lysts called the valuation of 5.9 times book value “mind-bog-gling” 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 al-ready 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 Law-son. -

These measures would have no signifi cant impact had the dis-count rate not fi nally assumed the role it is supposed to play in developed economies – the reg-ulator of the value of money. Despite the latest cuts, Russia’s discount rate remains the high-est among G20 nations. Yet, Rus-sia has shown impressive

progress: over the past 15 years, having survived a number of do-mestic and international crises, the CBR lowered the discount rate by more than 23 times.Until recently, however, the dis-count rate did not fulfi ll its main function, failing to affect bor-rowing costs for banks and in-dustrial 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 dis-count rate plus 5 pc. Otherwise, the difference between the in-terest 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 inter-est 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 fi nancial crisis, that the discount rate began to regu-late the value of money. In the summer of 2008, the Central Bank began to expand the list of securities acceptable as collat-eral for bank loans. Initially, the list included only low-yield gov-ernment securities. This blocked the refinancing mechanism as

unattractive government secu-rities 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 Fed-eral 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, add-ing one more percentage point on December 1, to 13 pc. At the same time, the Central Bank

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

Russian interest rate: trend analysiswas pumping cash into the country’s ailing banking sector. Both loans were issued at far below the discount rate. Sber-bank and Vnesheconombank then redistributed the assets among commercial banks. Even now, the CBR lends at the discount rate and most loans is-sued are short-term. Russian banks in need of cash can bor-row 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 di-rectly impact corporate or re-tail loans. In the future, a viable refi nancing system might give banks security, allowing them to lend more freely. -Maxim Builov is a special cor-respondent for Kommersant Daily magazine.

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.

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“Commercial banks offer what the state-owned Sberbank has always failed to pro-vide: service.”

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

03BOOKMARKS

Economywww.rbcnews.com English-language business newsbusinessneweurope.eu Economics and businessopportunities in Eastern Europe and the CISen.rian.ru/business RIA Novosti newswire

The net worth

The fi rst step in a long effort to make the Internet less reliant on the Latin alphabet allows “nations and territories to apply for Internet extensions… made up of characters from their national language”, the not-for-profi t Internet Corpo-ration for Assigned Names and Numbers (ICANN) said in a statement following a week-long summit in Seoul, South Korea.“This is... an historic move to-ward the internationalisation of the Internet,” said ICANN CEO and president Rod Beckstrom. “We made the Internet much more accessible to millions of people in regions such as Asia, the Middle East and Russia.” ICANN chairman, Peter Den-gate Thrush called it “the biggest technical change to the Internet since it was created four decades ago.” Currently, more than two million domains use the .ru suffix, though President Dmitry Medvedev

Stem сells to the rescueCONTINUED FROM PAGE 1

The IPO will be watched inter-nationally: HSCI is the fi rst to attempt to list on the Moscow Interbank Currency Exchange (MICEX) since the crisis began, and it will also be the fi rst Rus-sian 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 Minis-ter Vladimir Putin has pushed a policy of striving to harness Russia’s latent intellectual tal-ent.The economy may have been shattered by the fall of the So-viet Union, but one of Russia’s greatest strengths is the ex-tremely high level of education. Russia’s universities continue to churn out world-class scien-tists and engineers. The prob-lem is there has been so much money to be made from more mundane ventures – such as building modern sausage fac-tories – 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, dis-tributed via the Russian Ven-ture Company (RVC). The model draws heavily on the Israeli ex-periment in building up a hi-tech 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 manage-ment of the fund and its assets to professional investors. So far,

the company has set up seven venture capital funds worth about $630 mn, which are co-owned by RVC and private in-vestors.As HSCI is fl oating on Russia’s largest domestic exchange MICEX – upon the recently es-tablished Innovative & Grow-ing Companies platform that was created specifi cally to help small but dynamic companies raise capital – it hopes to tap into this capital, but HSCI will

also appeal to regular investors. Much of the Kremlin’s money has already been disbursed, yet none of the projects has 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 ex-panding into the Russian re-gions, as well as further afi eld, with offices in Ukraine and Ka-zakhstan. “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 fi ve and 10 years respectively, and pro-vides a service to about 2-3 pc of new parents. So, we are ex-pecting a 10-fold growth in this business over the next fi ve 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 compa-ny at between 675 mn roubles

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

success

made acquiring Cyrillic web ad-dresses an early priority. The .рф suffix will officially be dele-gated to Russia in February or March of next year, said Maria Mokina, spokeswoman for the Co-ordination Centre for Top Level Domain RU.Industry experts played down the importance of the .рф suffix for spreading Internet usage or the Russian language. “Users are attracted to services, not domain names,” said Tatyana Komarova, spokeswoman for Yandex, the country’s leading search engine. Andrei Vorobyov, spokesman for the registrar RU-Centre, said .рф was likely to have a different au-dience, “targeted for the local community”, while .ru would ap-peal to a wider range of users.Communications and press min-ister Igor Shchyogolev said that “Russia would be the fi rst coun-try to use domains in a national language”. The localisation of names “will help remove the lan-guage barrier”, leading to “further increases in the number of Inter-net users in Russia”, he said.In May, Mr Shchyogolev estimat-ed that Russia would see a 34 pc increase in Internet users this year, to almost 63 mn people, from 47 mn in 2008. -

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

MARIA ANTONOVATHE MOSCOW TIMES

State opens up on privatisation plans

A cabinet source revealed that in addition to stakes in the pre-viously 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 re-sort Anapa.The privatisation plan also calls for the sale of stakes in the Far Eastern port of Vanino, 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 Ros-gosstrakh, from the govern-ment’s list of strategic compa-nies. Medvedev removed Ros-gosstrakh 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 rou-bles ($2.64 bn) in these and other sales. The figure compares with a budget defi cit of three trillion roubles ($103 bn). The other as-sets for sale are 435 unspecifi ed wholly government-owned companies. Their sales account for 22 bn roubles ($754.53 mn) of the total fi gure. The privatisations are expect-ed 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 ef-fectively.”While most potential investors

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 MEDETSKYTHE MOSCOW TIMES

($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 com-panies are operating in saturat-ed markets, whereas HSCI is only starting to develop a mas-sive market. Unlike many West-ern companies, HSCI also has a research arm that has been de-veloping commercial products based on its stem cell research. It

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 fi rst is designed to stimu-late the development of the car-diovascular system, and is aimed at patients who have blood circulation problems, es-pecially at the extremities of

their limbs, which are difficult to treat.Another stimulates the regen-eration of tissue, and will help people recovering from heart attacks. The third is a skin reju-venation beauty treatment act-ing at the cellular level. All three are still at the clinical trial phase of their develop-ment.However, if any one of them proves to be effective, it could send the company’s revenues through the roof. -

will be more interested in such industry leaders as the Novoros-siysk Seaport and Sovcomfl ot, the smaller companies could draw bids from their current private co-owners, said Nadezh-da Timokhova, a transportation analyst for the Metropol invest-ment company.Billionaire Oleg Deripaska’s investment company Basic El-ement owns around 13 pc in the Vanino Port that handles a lot of cargo from the alumini-um giant Rusal, where Deri-

paska has a holding. Basic El-ement 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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‘Gemabank already has some 7,500 cli-ents or about 0.2 pc of all Russian parents with newborns’

Originally published inThe Moscow Times

List of companies to be privatised

Company StakeProfits (2008, unless

stated otherwise)

Sovkomflot 25 pc minus one share

$406 mn

Novorossiisk Seaport 20 pc $129 mn

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

First published in The Moscow Times

BOOKMARKS04 RUSSIA INDIA REPORT

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009Business

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

The Nord Stream and South Stream pipelines are designed to move

gas to Europe while avoiding politically sensitive territories.

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Challenging the energy forecast

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 de-pendence 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-

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 AMELINRIR

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

More work needed to realise joint potential

Dr Ashutosh Karnatak, an energy analyst

Laying a gas pipeline in Northen Russia

November to take part in the South Stream project. Finland and Sweden recently gave ap-proval for the Nord Stream route through the Baltic Sea.The Kremlin’s success, however, was marred by the Internation-al Energy Agency’s (IEA) fore-cast boding ill for the oil and gas industry. Based on its fi ndings, the global gas market is likely to see a shift of power from the supplier to the consumer due to falling demand for commodi-ties. The majority of Russian in-dustry experts doubt these pre-dictions.“Gazprom’s market research demonstrates that current growth will continue in the long-term on a global scale. Gas consumption in Europe is ex-pected to increase upto 700bn cubic metres in 2020 or by 12.5pc over the current level,” said Alexei Miller, deputy chair-man of Gazprom’s board.Dr Anatoly Dmitrievsky, direc-

tor of the Institute of Oil and Gas Problems questions the va-lidity of the constantly chang-ing IEA outlook. “A year ago, the IEA predicted a 10pc growth in demand every 10 years till 2030 .” Accord ing to Dr Dmitrievsky, the negative sce-nario of falling energy demand will happen only if the econom-ic meltdown continues until 2030, “but there is no data indi-cating this”. He also noted that demand projections should consider such important fac-tors as the vibrant economies in the Asia Pacifi c Region, low en-ergy consumption in Latin America and Africa and the two billion people who have no ac-cess 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 de-cline. 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 ex-pect a global slump in fuel de-mand. “It’s true that the eco-nomic downturn encourages world economies to be more en-ergy efficient and look for alter-native sources, while new gov-ernment policies seek – in the long term – to develop an inno-vation-based economy and re-duce our dependence on fossil fuels,” he said. -

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.

VIREN NAIDURIR

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 fi elds in western Siberia. Oil accounts for about 30 pc of India’s total energy consump-tion. The majority of India’s 5.4 bn barrels of oil reserves are lo-cated in Mumbai High, upper Assam, Cambay, Krishna–Godawari and the Cavery Ba-sins. The Mumbai High fi eld is by far India’s largest, with cur-rent 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 fu-el’s contribution to the increase of total primary energy supply for the past 26 years is the fol-lowing:•Incremental total demand for the next 23 years will be almost twice that of the past.•Incremental oil and gas de-mand 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 contrib-utor to the demand increase in absolute terms.So, there will be a shift in the complexion of energy con-sumption in India. Coal will continue to be the major sup-plier of energy, though with some decline in growth. The im-portance 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

be an overall change in the na-ture of demand. The market share of gas in the energy mix will go up.

What are the most important points from Indo-Russian stra-tegic projects in the oil and gas field? 1. The partnership on the Sa-khalin project in 2001, when India won a 20 pc steak.2. Russian commitment to the Kundkulam project.3. A seminar in Delhi on Janu-ary 15, 2005, which enabled the private sectors of the two sides to explore new areas of co-op-eration in the crucial energy sector.4. Establishing the Indo-Rus-sian centre for Gas Hydrates, inaugurated at National Insti-tute 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, pro-duction and marketing in 2000.6. The Memorandum of Under-standing between ONGC and Gazprom in 2005 envisaging the co-operation in hydrocar-bon processing, trunk line con-struction and operation.7. Participation of gas pipeline companies like Rosneftegaz (RNGS) and Stroytransgaz (STG) in construction of high-pressure gas pipelines in India.

What challenges do both coun-tries have to overcome in order to achieve greater heights in the future? Ownership of natural resourc-es: both the countries could join hands in sharing resources. Let Russia be the supply centre and India be the consumption cen-tre.Foreign investment and/or for-eign participation: Russia needs to develop its economy, and for-

eign participation has to be en-couraged so untapped resourc-es can be developed and get commercialised.Provision of appropriate con-necting infrastructure for pro-duction and consumption cen-tres. Huge fi nances will be re-quired from the Russian gov-ernment so production systems, refi neries, etc. can be developed. In the same way, India also needs to develop infrastructure like pipelines for transporta-tion of oil and gas.An appropriate regulatory en-vironment: in India, a gas dis-tribution regulator is in place. In Russia, such a regulatory en-vironment is yet to be devel-oped.Development of clean energy technologies: at the recent sum-mit of G8 countries, the IEA was advised to develop a series of technology road maps which seek to identify steps for devel-opment of commercialisation of 19 key energy technologies. These are predominantly clean technologies which may con-tribute towards national energy security, economic develop-ment and helping in reduction of GHG emissions.

How do you foresee the Indo-Rus-sian partnership five years from now? The relationship is time-tested. In the next fi ve years, they are going to further their deep roots in a reformed manner, which will have significant regional and global impact. It’s impera-tive for India and Russia to par-ticipate 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 pro-posed gas pipeline that will con-nect various Asian countries for gas transportation. The propos-al 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 deliver-ing 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 and West-ern Europe. This trend is likely to continue in the future, provid-ed 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-

ments of the world. Asian growth centres may have access to abun-dant potential supplies of gas from Russia, the Middle East countries and other former So-viet states. Access to this gas can be achieved through the pro-posed AGG, though several ob-stacles exist. Russia can mediate with all the countries to make

this pipeline project happen and ensuring energy can fl ow from west to east. It would of course also benefi t 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 hydro-electric and thermal power projects. -

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05BOOKMARKS

Businesshotelbusiness.next-stop.ru Hotel business in Russia websitebusinessneweurope.eu Economics and business op-portunities in Eastern Europe and the CIS

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 ho-tels, 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 fol-lowing fact can be observed. In the centre of the capital today, there is a cata-strophic shortage of three - to four-star hotels with a policy of medium-range pric-es, and also of the actually unexploited format for mini-hotels, which is so popular in European cities.Gianni van DaalenEuropean Chairman for Kem-pinski Hotels and General Manager of the Hotel Balts-chug Kempinski Moscow

The fluctuations of the market also have their positive sides. They force hoteliers to change their poli-cies in the direction of maximum orienta-tion towards the cli-ent. This should lead to an improvement in the competitiveness of the hotel business and in the quality of hotel services. Pavel LysenkoChairman of the company UNI-COR, which has implemented a hotel project under the man-agement of InterContinental

The level of success depends to a great extent on the quality of its management. Therefore, if a devel-oper is not a special-ist in the hotel busi-ness, it is certainly advisable to bring a professional ho-tel operator into the project. Polina Kondratenko, Director of Valuation and Consulting Department at Col-liers International

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

Moscow needs to be more accomodating

How has the relationship between India and Russia been in the hos-pitality 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 con-cerns Russian tourists visiting our leisure destinations. Rus-sians making visits to Goa has seen a steady increase of around 15 pc every year. There are a lot

Russian charters that come into Goa during the months of No-vember 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 luxu-ry 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 tour-ists 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, air-lines and hotels to meet and dis-cuss potential future business opportunities. The MITT (Mos-cow International Travel and Tourism) exhibition which

takes place in March every year has seen as a huge growth op-portunity as Kerala Tourism made its inaugural entry at the MIIT. Further, Ayurveda and Wellness related series is gain-ing popularity with Russian outbound tourists and some 9,766 Russians visited Kerala last year, a 47 pc increase on 2008. The Russians have initi-ated and introduced direct Charter fl ights into major Indi-an resort destinations and thus, this makes it very much a more economically viable destina-tion for Russians to fl y down to. The last year’s economic melt-down 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 learn-ings, both India and Russia can

Hospitality Both countries can attain milestones in this sector

Strengthening prospects for tourismderive 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 atmos-phere 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 Rus-sia. The main challenge I think that both countries have to overcome is the concern of se-curity and safety of each other when in each other’s country. Also, the language barrier and the issues faced while obtain-ing visas need to be addressed.

How do you see the Indo-Russian partnership five years from now? Increased air connectivity be-tween Russia and the key des-tinations in India, especially through West Asia into Goa and Kochi would see a great in-crease of around 100 pc in the next few years. -

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 NAIDURIR

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.

ALENA RIABOVARIR

Bobby Kamani, Director, Zuri Group Global

Before the crisis, the sparseness of hotels was the secret of Mos-cow’s profi tability. For several years running, the capital main-tained leadership among Euro-pean cities in terms of hotel business growth and the abso-lute revenue per available room (value of the RevPAR). It was not the number of tourists that generated profi ts, but the price of accommodation: luxury ho-tels 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 fi rst half of 2009 revealed the dangers of the high-pricing

strategy. According to STR Glo-bal, the profitability of upper and upscale hotels fell by a third. The crisis also put some new hotel projects on hold. Sur-prisingly, the hotel sector proved most buoyant and at-tractive on the commercial real estate market. According to irn.ru, while offices emptied devas-tatingly by 45 pc, the hotel oc-cupancy rate decreased by 15 pc. The Moscow government has taken steps to facilitate in-vestment in the hotel sector as part of its Tourism Develop-

ment Programme by covering two thirds of the interest rate on a loan taken out to build a hotel in Moscow and by allowing in-vestors 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 con-sultant for hotel real estate with Cushman & Wakefi eld Stiles & Riabokobylko, says that most investors expect a return on in-vestment of about 15-20 pc (as

opposed to 10-13 pc before the crisis).The premium segment has been cornered by Hilton, Kempinski, InterContinental and other major chains catering to busi-ness clientele. They have sur-vived the economic shrinking spell in Russia and emerged well-adapted to the new con-straints.Gianni van Daalen, European Chairman for Kempinski Ho-tels and General Manager of the Hotel Baltschug Kempinski Moscow, says that in the au-tumn, with rebounding busi-ness 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 them-selves comfortable accommo-dation”, 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. Understanda-bly, price-cutting in the luxury segment is damaging for inter-national reputations, so opera-tors sustain profit by offering special programmes and dis-counts instead. Two- and three-star accommodation is still a pristine segment of the Moscow hotel market.

On October 1, 2009, Vladimir Resin, Head of the Moscow Urban Planning Policy and De-velopment Complex, an-nounced at a press conference that such hotels would become a priority in the next few years. Olga Shirokova, Director of Blackwood Consulting, Analy-sis and Research Department, pointed out that developers prefer to build high-class es-

tablishments rather than mid-scale ones because they pay off much earlier.On the other hand, in Moscow – especially the centre – there is an acute shortage of construc-tion sites. Opening a fi ve-star hotel in an already-finished building is often impossible: technical specifications for equipping the future hotel are highly demanding. -

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

“Luxury hotels are in demand from corpo-rate clients who are not prepared to deny themselves comfort.”

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IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009Co-operation

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

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

A new era for cultural connections

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

The Russian language is on the rise

India has a tradition of learning languages; Russian became very popular after 1965. It was being taught earlier in some places, starting at the Univer-sity of Delhi in 1946 – before In-dian independence. Momen-tum 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.

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 col-lapse 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 Rus-sian studies admits around 40 students into its fi rst year pro-gramme. They can study to PGD level. They have multiple job opportunities. India and Russia have a strong collabora-

tion. The energy sector has re-cently come to prominence and co-operation is growing. The demand for Russian-speaking 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 Lit-erature united all university de-partments. This organisation, which I have the honor of lead-ing, 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-

centrate only on language, but a broader area of Russian stud-ies. We received a very good re-sponse 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 confer-ences every two years. In addi-tion, we are co-operating with the Russian cultural centre in New Delhi on successful inter-national conferences.More Indian and Russian ex-perts 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 coun-tries, but somehow this became non-functional over the past few years. Now both govern-ments are working to reactivate the agreement.I believe these two countries

cannot be separated. Relations have reached the people's lev-els: 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, feel-ing of justice, equality – and this brings us together.These two countries will play a key role in the history of man-kind. Threats are looming large in every region of the world. India and Russia are going to play a decisive part in guaran-teeing 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 pub-lishes a wide variety of views. Indirectly, it is helping to solve the problems of society. In my opinion, this is a real responsi-bility for the press. -

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.

ALEXANER ZELENKOVYURI VYSOKOVRIR

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 ZELENKOVRIR

The prevailing subjects were related to cultural exchange, public diplomacy and promo-tion 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 lead-ers have met more than once this year at various internation-al 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 exag-geration in saying they are stronger than ever before.” Speakers at the Forum declared a short-term economic objec-tive 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

trade target of $10 bn,” said Borodavkin. Since 2005, bilat-eral 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 eco-nomic crisis.Prabhat Shukla agreed with his Russian colleague: “$10 bn may seem a modest amount com-pared to the scale of our econo-mies, but considering the deep global recession, this is not bad at all”, said the ambassador.The identified trade areas promising quick growth in-clude the energy sector, space exploration, telecommunica-tions, pharmaceutical industry, nanotechnology and aircraft engineering.Forum discussions were grouped into three subject areas: co-operation in science and technology, public diplo-macy and the presence of Rus-sia and India in the global media context. Concluding the Forum, the Eur-asian Russian Writers’ League and the Indian Writers’ Union signed an agreement under which arrangements will be made to translate works of Rus-sian literature for India and In-dian literature for Russia.“Events such as the Russian-Indian Public Dialogue Forum are bound to enhance relations between our nations,” said Al-exander Chesnokov, Deputy Head of the Federal Interna-

tional Co-operation Agency (Rossotrudnichestvo) at the closing press conference. His words were echoed by Agarwal Jai Prakash, Presi-dent of the Delhi Committee of the Indian National Congress Party, who said: “Such forums provide an opportunity for de-tailed 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 exam-ple in 1992, when the official Russian centre in India received no funding, Russian scientifi c and cultural institutions pre-

served the links between Rus-sian 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 with-out exaggeration because until

now, we have not seen any bilat-eral 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 as-sistance from the Russian Min-istry of Foreign Affairs. -

Ramadhikari Kumar is Rector of

Jawaharlal Nehru University

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russiatoday.com Russia Today TV channeleng.globalaffairs.ru Russian foreign affairs online magazine Politics

Modernisation In times of change, a new strategy is essential

Recruiting the elite for the future

Similarly, a new Ingush presi-dent has been appointed, whose policy of appeasement and con-fidence won public approval. Both Medvedev’s article “For-ward, Russia!” and his annual address fell on good soil: the in-itiator of reform is not just the

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

In the president’s words…

In the 21st century, our coun-

try once again needs to undergo

comprehensive modernisation.

This will be our first ever experi-

ence of modernisation based on

democratic values and institu-

tions. Instead of a primitive raw

materials economy, we will cre-

ate a smart economy producing

unique knowledge, new goods

and technology of use to people.

Our relations with other coun-

tries should also be focused on

the task of modernising Russia.

We must not simply be full of

hot air, as they say. We are in-

terested in capital inflows, new

technologies and innovative

ideas. We know our partners

are counting on a rapproche-

ment with Russia to realise

their own priorities. Therefore,

our foreign policy must be ex-

tremely pragmatic.

We have been providing direct

support during the crisis, di-

rect subsidies to Russian com-

panies, and this money comes

to more than 1 trillion roubles

now. In the future, we will pro-

vide such support only to busi-

nesses that have clear plans for

raising effectiveness.

Regarding state corporations, I

think that this legal form of en-

terprise has no future overall

in the modern world. The cor-

porations with a lifetime set by

law should wind up once their

purposes are accomplished,

and those operating in a com-

petitive business environment,

should be eventually trans-

formed into joint stock compa-

nies under government control.

Many aspects of political life

have been subject to public

criticism… As the guarantor

of the Constitution, I will con-

tinue to do everything possi-

ble 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.

CONTINUED FROM PAGE 1President himself, but all soci-ety. 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 ac-cepted Medvedev’s agenda, with top officials starting to

take innovation much more se-riously. On the other hand, it is thanks to emerging consensus among the elite that the Krem-lin can fi nally loosen its grip a little. In this situation, an eco-nomic breakthrough and tech-nological upgrade are neces-sary, in addition to socio-polit-ical modernisation and work-

ing democracy. This is what comprehensive modernisation means under current circum-stances. 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?

ALEXANDER RAHREXPERT AT THE GERMAN SOCIETY FOR FOREIGN POLICYThis was a very interesting, blunt and at times, dramatic speech, which was in some ways reminiscent of the state-ments 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 propor-tion 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 pub-lic feels that things in the coun-try are as bad as their leader says.If the president succeeds in shaking up the structure of Russia’s state-owned corpora-tions, 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 de-c ided in the next three months…The important thing is that Medvedev mentioned the need to change the political system.

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.

Based on materials from Expert magazine

Material fromNovaya gazeta, Tribuna, Polit.ru

tion efforts of primary indus-trialisation, made under spe-cifi c historical conditions and with excessive human resourc-es. Our society is different today, and we need different modernisation mechanisms. Real economic and technical modernisation and the crea-tion of a free society are vital in

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

But I was personally expecting much more from him... DMITRY ORESHKINPOLITICAL SCIENTISTMedvedev signalled some turn-ing points where his policy dif-fers from Putin’s. Foreign policy should be built on pragmatic interests, and not on “nostalgic prejudices”. Medvedev reported an infl ux 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 mo-nopoly, but Medvedev thought it pointless. Medvedev talks of financing non-state commer-cial organisations, which previ-ously “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 in-fluential groups. But I don’t know who Medvedev will be able to rely on in all this. “His-torical prejudices”, a particular approach and an unfriendly foreign policy are precisely what guides the Putin elite. Medvedev will meet with or-ganised resistance. I think a cer-tain turbulence is emerging in the upper echelons of power. KONSTANTIN REMCHUKOVEDITOR IN CHIEF, NEZAVISIMAYA GAZETAIt seems to me that Medvedev’s speech was considerably more dramatic than it might have seemed. He spoke for 100 min-utes and the main thing to which I would draw attention is that his whole speech was

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 un-certainty associated with changes frightens more than the price we have to pay for bu-reaucracy or for some kind of conservative policy.And if the president is not to fi nd himself alone in his desire to steer the country towards changes and to avoid a split be-tween the old bureaucratic hi-erarchies and the hierarchies of modernisation, he will need the intellectual support of the elites, including their support for building a bridge of under-standing between the presi-dent and society, which in re-

cent years has demonstrated a very high level of conserva-tism. VALERY FADEYEVEDITOR IN CHIEF OF EXPERT MAGA-ZINEIn past messages, there were more specifi c decisions, which implied specifi c fi nancing. The resources for implementing decisions and proposals in pre-vious 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, be-cause the crisis means the state budget is smaller and tighter. But it is therefore possible to talk about bringing in a differ-ent resource. And what differ-ent resource is that? The social resource. Not only money and bureaucracy, but primarily so-ciety, all that is most wise, free and just. -

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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 airlinetransportation

In 2006, flights to China ac-counted for as much as one fifth of Europe's total air traffic. Ac-cording to Airbus' Global Mar-ket Forecast (China) for 2007-2008, passenger and freight traf-fic between Europe and Asia is set to rise further. On the eve of the global crisis, the company's experts predicted a five-fold in-crease in passenger traffic and a six-fold rise in freight transpor-tation over the next two dec-ades."This is a juicy fruit, and Mos-cow 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 ex-tent, 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 Rus-sia will have to revise its policy on fly-over fees charged for the right to fly over its airspace. Be-fore the crisis, as part of prepa-ration 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 para-doxically being held back by the existence of its three interna-tional 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.

moscow: europe’s new bridge to asia

Sheremetyevo (14 mn) is state-owned except for Terminal D (see below), which is owned by a consortium with Aeroflot at the head. Vnukovo (8 mn) – by pri-vate 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 infrastruc-ture, while holding down prices and promoting the development of the service market.Over the past few years, all three airports have launched large-scale construction projects, changing them beyond recogni-tion. "In the past Moscow's airports made a poor show, with dim lighting masking the dated So-viet design, and they contrasted sharply with the modern air-ports of Western Europe and the US," recalls a Spanish business-man who has long business ties with Russia.

Domodedovo transformed from a backward airport to Moscow's most modern facility, luring cli-ents from its rivals, including S7 Airlines (formerly Sibir). S7, Russia's second largest carrier, left Vnukovo for Domodedovo, becoming its main domestic customer. Sheremetyevo was not spared, either, with three large customers – British Air-ways, Swiss Air, and Russia's Transaero – defecting to Do-modedovo."Our shift to Domodedovo six years ago enabled us to intro-duce electronic ticketing ahead

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 operat-ing in Russia, Lufthansa boasts the largest business, carrying over one million passengers a year. Domodedovo has been up-graded recently, adding a multi-modal 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 mid-February, 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 prob-lems that London’s Heathrow airport experienced upon the opening of its Terminal 5, when nearly 30,000 items of baggage were lost, Sheremetyevo’s man-agement began testing baggage scanning equipment in Terminal 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 – un-like any other in the world, ac-cording to Sheremetyevo’s press release – has been installed that uses a system of radio tracking devices for each piece of bag-gage. 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-

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,” com-mented 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 non-stop 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.

Until recently, Sheremetyevo’s main problem was the lack of convenient and fast flight con-nections for transit passengers. The terminal for domestic flights (Sheremetyevo-1) is located "across the road", a taxi ride away from the international ter-minal. "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 fi-nally pay some $16 for a taxi to get to the terminal for domestic flights. It’s extremely inconven-ient," complained a British cor-porate 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-opened Terminal D, Ter-minal E is in the final stages of construction. In December the company also plans to complete the refurbishment of its old in-ternational terminal, Shereme-tyevo-2. Together with Terminal E, all of Sheremetyevo's inter-national terminals will be unit-ed under the same roof. The unit-ed complex will be able to serve up to 25 mn passengers a year.Once 60 pc of flights have been transferred from Shereme-tyevo-1, the old terminal for do-mestic flights will be redesigned to serve low-cost passengers. The master plan through 2030, which Sheremetyevo has devel-oped together with Britain's

Scott Wilson, focuses on the northern section of the airport, spacious enough to accommo-date a third runway (the south-ern and northern sections will be linked via an underground automated transportation sys-tem), 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 mil-lion tonnes of freight.

three hubs for the big threeWith the launch of Terminal D, Sheremetyevo becomes an in-ternational 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 One World with British Airways in the lead. Unlike Sky Team, Star Alliance and One World don't have Rus-sian airlines among their mem-bers. It is on Russian airlines joining these alliances that the future of Sheremetyevo's rivals depend.S7, which is the leading domes-tic carrier, has announced talks with One World. If the talks are successful, the alliance will set-tle at Domodedovo, while Lufthansa will have to find an-other Russian partner with a de-veloped route network.

big future for a northern hub

In October, the government of St Petersburg agreed to devel-op Pulkovo Airport as a conces-sion. 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 inter-national consortium, The Aerial Gates to the Northern Capital, whose controlling stockholder is Russia’s Vneshtorgbank.The general plan is for a new international passenger termi-nal, which would be able ini-tially to process some 7.4 mn passengers a year and 22 mn

by 2025. In addition to the ter-minal, Pulkovo will have a tran-sit hotel, business centre, of-fice buildings and parking. St Petersburg has earmarked 41,400 sq m for the entire Pulk-ovo project. The principal run-way 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 Lenin-grad region regarding the con-struction of a third runway.

elena myagkovaFollowing the reconstruction of Sheremetyevo-2, the airport's com-bined annual passenger traffic is expected to increase to 25 m

‘By mid-February, the new terminal will service all of Aero-flot’s domestic and international flights’

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Russia india RepoRtin association with rossiyskaya gazeta, russia the economic times wednesday_december 09_2009

09bookmarks

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

Sheremetyevo Airport's Terminal D was unveiled as SkyTeam's hub on November 15, 2009

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.

yuri solozobovRIR

the new, quicker way to bypass somali pirates

Two major overland transit routes intersect in Russia – the East-West route, stretching from the Far East via the Trans-Siberian Railway to Europe, and the North-South route, running from Scandinavia and the Baltic region through Mos-cow and Astrakhan to Iran and India. Another major interna-tional route lies in the north – the North Sea Route – and links the Asia Pacific region to North-ern Europe, serving as a bridge to transatlantic routes. Also im-portant are transpolar aviation routes from North America to the East.Moscow, as a major transit cen-tre, can be incorporated into all of these routes. The city boasts of a well-developed railway in-frastructure and is currently renovating its airport network. Through a system of deep-wa-ter channels and rivers, Mos-cow 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 con-tainers shipped between Asia and Europe is expected to reach 40 mn by 2015, provided that the global economic crisis sub-sides. The Crete Conference deter-mined nine basic international transportation corridors (ITC) – connection routes for various types of transportation, provid-ing for quick transshipment at

node stations. Particularly im-portant for Russia are two routes: ITC 2 (East-West) and ITC 9 (North-South). ITC East-West is a global overland trans-portation corridor spanning Japan, Russia and Europe. It will be based on the existing route Berlin – Warsaw – Minsk – Moscow – Nizhny Novgorod and the Trans-Siberian Rail-way. It will also embrace rail-way 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 ex-isting 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 vol-ume of cargo traffic between Europe and Asia. The second largest competitor is the planned railway corridor China – Kazakhstan – Russia – Eu-rope, which has made signifi-cant 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 effec-tively developing project. An

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 be-tween the Middle East and the Baltic regions. Leading exporters are prima-rily guided by two criteria: fi-nancial feasibility and the level of risk. Indeed, if you need to ship freight from India to Hel-sinki, 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 trans-ported by railway to the north-western ports. To implement these plans, Rus-sia developed a Transport Strat-egy envisioning the reconstruc-tion of 21,000 km of railway tracks, 2,900 km of roads and 9 airports. In addition, there are plans to build new seaport fa-cilities with a total transship-ment capacity of 215 mn tonnes a year, as well as 12 mn tonnes for river ports. Particular atten-tion will be paid to the develop-ment 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 Strat-egy’s implementation will come from the federal budget, and the rest will be provided by private investors. Thus, a large Russian-German-Iranian con-sortium has been formed for the creation of ITC North-South 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. -

cargo The North-South route is a faster solution

A docked container ship at a Russian port.

terminal sufficient for years to come

does the new terminal d at mos-cow’s sheremetyevo airport meet international standards? Certainly. In terms of planning and completeness, not to men-tion 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 in Atlanta can service almost 120 mn people a year, while Mos-cow’s Terminal D can take just 12 mn, and Sheremetyevo as a whole 36 mn. Bear in mind, how-ever, that Americans travel much more than Russians, and there are two other international air-ports in Moscow: Domodedovo and Vnukovo.

was there something at shereme-tyevo that delta was unhappy with 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 con-trol facilities no longer meet to-day’s requirements. The market and passenger demands have changed greatly since the ter-minal was built. Terminal D is a completely new, state-of-the-art structure, and it is in full compliance with the high standards of SkyTeam [an alli-ance of several major airlines].

how has the global economic cri-sis 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 mar-ket. Figures show that passenger flow from Russia to the United States increased by 6 pc over this period.

when the crisis is over and the pas-senger flow resumes its growth at pre-crisis levels, will the new ter-minal’s capacity be sufficient for skyteam? More than enough. The old Sheremetyevo-2 terminal could service up to 11 mn people dur-ing peak times. The new termi-nal’s capacity is 12 mn. Also, we should not forget that this ter-minal will mostly service Sky-Team member carriers, while Sheremetyevo-2 was also used by other carriers. The capacity will be sufficient for many years to come. -

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

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

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

for connections with Russian flights in St Petersburg: the bulk of the passenger flow from Ger-many goes to Moscow.As for UTair, which has in-creased its share of the domestic market recently, it prefers Vnu-kovo. Whether the German com-pany will agree to change an air-port for the sake of its Russian partner is a question.There are no doubts about Vnu-kovo technical capacity: like

Sheremetyevo and Domode-dovo, ongoing construction is extensive. According to Vitaly Vantsev, Deputy General Direc-tor of Vnukovo, a new terminal will be completed by 2012, which will be one of Europe's largest. Vnukovo will have some-thing to offer to Lufthansa, too. If all goes to plan, all the three air-ports will become major air hubs, which will open the road to new levels of competition. -

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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 regionRegion

The Kirov project is an attempt to involve some radical op-position 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 MarkovState Duma deputy, United Russia

Medvedev is experi-menting with different types of governors. He appointed Boris Ebzeyev, a human rights expert, presi-dent in Karachay-Cherkessia and war veteran Yunus-bek Yevkurov in Ingushetia. The president fired a number of long-term governors. He’s see-ing how liberals can handle a region where they’re not popular.Igor BuninPresident, Centre for Political Technologies

Quotes

Nikita Belykh: reforming from within

It is Saturday, the street-clean-ing day for students perform-ing community service, and Kirov governor Belykh, getting his hands dirty just like every-one else, is beaming with de-light.The young volunteers around him sometimes pause to stare at this odd, restless man, the antithesis of the provincial ap-paratchik. The 34-year-old Be-lykh is indeed a strange sight – a one-time opposition leader who has seen the inside of a po-lice car, he has been unexpect-edly elevated to the establish-ment 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 pro-tests outside the Hermitage, in St Petersburg. And now here he is, their gover-nor, 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 inde-pendently from me.” Last au-tumn, Belykh quit his position as a leader of the opposition party, Union of Right Forces, to the disappointment of party members and Russia’s demo-cratic opposition. He declared the party had been compro-mised, essentially incorporated into a pro-Kremlin bloc and that its further agitation against the system was a sham. He de-cided to reform from within.“For the fi rst time in my life, I am on the same side of the bar-ricades 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

Maria Gaidar – now Belykh’s Deputy in charge of health and social

issues – during an anti-Kremlin demonstration in 2007

Governor Nikita Belykh is

making Kirov a litmus test

for modernising Russia

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-

sider. Last December, he ap-pointed 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 unem-ployment, and little in the way of hope for its dwindling popu-lation. Young people try to leave the region right after high school.Last year, 15,000 Kirov profes-sionals took off in search for better jobs.Maria Gaidar, 27, the daughter of Russia’s fi rst prime minister and a former opposition activist, is famous for hanging off a Mos-cow bridge with a banner say-ing: “Give us our elections back!” Now, as Belykh’s deputy respon-sible for health and social issues, Gaidar said the word “innova-tion” sounded strange in the re-gion where hunger is still a prob-lem and the death rate over-

shadows the birth rate.Belykh started with something he knew best, transparency. “In his letter ‘Russia, Forward’, Medvedev tells us to fi ght cor-ruption, modernise technolo-gies and abolish state pater-nalism,” Belykh said in an in-terview. “What I can do is re-form society from the bottom. People can stop waiting for a command by the state, and in-stead they can start demand-ing and controlling us, the bu-reaucrats.”Since taking office, Belykh has reversed long-standing practic-es that plagued Kirov and the re-gional level all over Russia: Be-lykh 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 in-terest groups, including non-governmental organisations and trade unions to encourage a free exchange of ideas.To attract business from out-side the region, he fought busi-ness monopolies in court and promised investors a corrup-tion-free zone. To help the state budget, he auctioned off his of-fi cial 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 exempla-ry liberal and transparent polit-ical 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 pro-tege. The region is becoming a litmus test for Medvedev’s own success in modernising Russia. On the day of his visit, the pres-ident promised the Kirov gov-ernor support with the most painful social and economic is-sues Belykh is battling.Alexander Lebedev, billionaire and part owner of Aeroflot, came to Kirov to strike busi-ness deals. Lebedev, Belykh’s old friend, will construct two- and three-storey buildings, while Gazprom agreed to build pipes to bring natural gas to towns and villages. In the com-ing 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 self-taxation.“We are trying to inspire people to control the authorities spend-ing 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 be-lieves the new trend will make municipal authorities more in-dependent by giving the local authorities more control over their own taxes. “Unfortunately, most bureau-crats still sit doing nothing, waiting for my command. I am not Peter the Great to force bo-yars to cut off their beards. It has been 300 years and the mentality has not changed,” Be-lykh 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.”-

FactsThe 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.

1

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.

2

Main industrial sec-tors include engineer-ing, non-ferrous and

ferrous metallurgy, chemical, microbiological, forest, wood-working, pulp and paper and food industries. Building mate-rials, phosphorite, and peat are also important.

3

‘This is our chance to rehabilitate some democratic values, to liberalise modern Russia’

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Can Medvedev appointee Nikita Belykh – an outsider among Russian governors – energise the moribund Kirov region? Some say the passive province is a grim micro-portrait of modern Russia.

ANNA NEMTSOVARIR

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

[email protected]

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

11BOOKMARKS

Societywww.russianinternet.com Rusian Internet website home page www.bl.uk/reshelp/findhelplang/russian Find Rus-sian Internet resourses

The Russian Internet today has the second biggest audience after television, but its infl uence on the thinking audience is be-yond comparison. Internet users are the most advanced and in-fl uential segment of society.

A zone of freedom and justiceAlexei Shumm’s life is divided into two unequal parts, deline-ated by the fateful date of May 13, 2009. 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 in-vite sympathy. What prompted his message were the strange goings-on surrounding the in-vestigation 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 thou-sands of letters from angry bloggers, lifting his blog into the top fi ve most read. The next day Alexei got a call from an in-vestigator 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

Internet blogging in Russia is a political weapon

Blogosphere battles gain momentumRussia 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.

SVETLANA SMETANINARIR

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

President Medvedev became an active blogger in autumn 2008.

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 In-ternet 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 peas-ant who has stolen a sack of grain is whisked away to prison in no time, while the big chees-es who have caused huge dam-age to people, wildlife and the country are left untouched?”

Web users fumed. Indeed. it took Rosprirodnadzor, the Fed-eral 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 fi ght-ing corruption and official abuses which the press has

dubbed “the Dymovsky Syn-drome”. 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 Dy-movsky, a police major from Novorossiysk, complained in a video on his blog about abuses in local law-enforcement agen-cies 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 dis-charged from the police and ac-cused of libel. However, an in-quiry 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 ex-pert Alexei Pankin. “Because normal democratic mecha-nisms of influencing officials are cumbersome or do not func-tion at all in Russian society, people have decided to act di-rectly through the Internet. And it works.”Pankin does not agree with those who claim traditional journalism has lost all credibil-

ity. For more than fi ve years, he has sat on the jury of the Sakha-rov 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 re-port facts, but accompany the people they write about to court to seek justice. True, the stories do not always gain public noto-riety. Yet even here some excep-tions can be cited, like the case of army recruit Sychev who was crippled from army bullying. That outrageous case was fi rst reported by a newspaper in the Urals, triggering a nationwide response.

The Russian Internet is 15 years oldThis is a jubilee year: Russia’s .ru domain was registered 15 years ago, and the most popular blog host, LiveJournal, is cele-brating its 10th anniversary. This is Russia’s most frequently visited resource, with a month-ly audience of nearly 9 mn peo-ple. The Russian LiveJournal is in some ways a unique phenom-enon. While in the West, where blogging originated, it is typi-cally the pastime of teenagers, Russia’s LiveJournal had a more mature audience from the start: journalists, professionals and politicians. Maxim Kononenko, a promi-nent journalist and creator of popular blogs, says their qual-ity content began turning Live-Journal into a discussion club,

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

The chief blogger of all RussiaPresident Dmitry Medvedev joined the blogging community on October 7, 2008. His first video blog covered his trip to an international economic confer-ence in France. At first, Medvedev’s blog was not a bona fi de blog, because it did not allow comments to be posted or feedback from the readers. But starting from 2009, that gap was fi lled. During the course of the year, the Presi-dent’s blog received more than 1.6 mn visitors who left over 4,000 comments. The President’s press secretary, Natalia Timakova, says her boss regularly reads the comments and sometimes even writes the answers himself. Medvedev is the fi rst Russian politician who is (or tries to be seen) as a “dig-ital native”. The blog provoked mixed com-ments. Some praised the Presi-dent 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 communica-tion.”

Battles between professionalsA feature of the Russian blog-osphere is the existence of a large body of political com-mentators, some of whom are purveyors of the views of their employers. The verbal battles

in LiveJournal sometimes be-come 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 recent-ly headed the blog service at Sup Fabric, “we saw the dedi-cated work of people who re-ported to the office in the morn-ing 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 vehi-cle 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 fl at no: a commercial compa-ny 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 Rus-sian users. However, as the founder of LiveJournal, Brad Fitzpatrick, said in an inter-view, 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 Cen-tre, 31 pс of Russians use the In-ternet to varying degrees. Clear-ly, these are the most thinking and forward-looking members of society. Perhaps the real civil society in Russia is being creat-ed in the blogosphere. -

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

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BOOKMARKS12 RUSSIA INDIA REPORT

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

www.en.rian.ru RIA Novosti: Russian News and Information Agencywww.russiaprofile.org Russia Profile onlinemagazineOpinion

Letters to the EditorMore on cultural relations, please!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 cultur-al events in India with shows, dates, times, ven-ues and a calendar of all these activities. I am always very keen to hear about differ-ent Russian regions, to learn about their cul-ture 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! AJAY BOTHRA NEW DELHI

Pensions policyAs an OAP, I read the story “Pensioners hold the key to revival,” in your November issue, with intense interest. Praise God, the Putin admin-istration commits to raise pension payments to those who have done their bit for the mother-land.LUUNITED KINGDOM

The ultimate Russian comfort foodAll Russian food is delicious, but my favourite is Solyanka! For those who don’t know, that’s a sa-voury 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!GARY MASONLONDON-YEKATERINBURG

Questions? Opinions?Please send your comments by email([email protected]) or fax (0870 928 9823), with your name, address and other contact details for verifi cation. If you do not wish your name or email to be published, please indicate so, clearly. Once published, letters and guest columns become the property of Rossiyskaya Gaze-ta, and it reserves the right to reject, con-dense or edit for clarity, or when informa-tion cannot be substantiated. We do not publish anonymous letters, letters advocat-ing extremism or containing personal at-tacks, mass mailings or commercial appeals. All articles and letters appearing on the pages 12-14 do not necessarily reflect the opinions and views of the editors of Rossiyskaya Gaze-ta and Russia India Report.

The destruction of the Berlin Wall and the glob-al market revolution that followed emancipated hundreds of millions of people. Though censor-ship 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 pene-trate 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 justifi ably 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 defi-antly standing and new ones have been erected.In the mid-19th century, British statesman Ben-jamin Disraeli described what he perceived as two “nations” coexisting in Britain yet separated by a wall of mutual incomprehension: “Two na-tions 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 dif-ferent planets. The rich and the poor.”Today there may be one globe in which elites from Mumbai, Shanghai, Dubai, London, New York and São Paulo converge to discuss common pro-fessional interests and share the same vintage wine, while remaining connected to their home-base with their Blackberrys or iPhones. But there are still millions of globally disenfranchised peo-ple, 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 Berlin-ers. The fi lm 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 fol-lowing the crisis and the prospects of a jobless growth recovery. In two years, the numbers suf-fering 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

JEAN-PIERRE LEHMANNVEDOMOSTI

MANY WALLS MUST STILL BE DESTROYED

the walls between these two worlds seem increas-ingly remote.Soon after the destruction of the Berlin Wall, a new wall was being constructed along the US-Mexico 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 Berlin Wall came down but the Schen-gen 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 coun-tries 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 bar-riers). The most pernicious discriminate against poor countries; to cite one of hundreds of exam-ples, tariffs imposed by the Unites States on im-

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

DRAWING BY DMITRY DIVIN

ports from three of the world’s poorest countries – Cambodia, Bangladesh and Pakistan – are re-spectively 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 Develop-ment Agenda was supposed to eradicate. How-ever, after being launched in 2001, it remains to-tally bogged down with little prospect of conclu-sion 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 Parti-tion, the wall between India and Pakistan re-mains almost impenetrable (except to intrepid smugglers!). There is only one rather desolate

border crossing, the Waga Border. In spite of pro-fessing unity, citizens in the 22 members of the League of Arab States fi nd many walls in seek-ing 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 be-hind 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 Berlin Wall notwithstand-ing, 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 accept-ed the humiliation of being labeled “honorary whites”! Going back further into history, busi-ness was also of course able to draw benefi ts from the labour found behind the walls of Nazi con-centration 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 refl ect on where we have come from and where we are going, it be-hooves 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 re-sponsible and ethical, but also because it is the only way to ensure our survival. -

This issue has beenconceptualised byINTERNATIONAL

MEDIA MARKETING,RESPONSE

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• Feature Co-ordinator:Mehernosh Gotla

([email protected])

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

13BOOKMARKS www.roscosmos.ru Russian Federal Space Agency

www.ln.mid.ru/brp_4.nsf/english Ministry ofForeign Affairs documents www.cdi.org/russia/johnson Johnson’s Russia List Opinion

The pollsHalf of all Russians questioned don’t know who built the Berlin Wall

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 Repub-lic. They include middle-aged Russians and residents of big cities. Ten pc of Russians are confi dent that Germa-ny 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 bi-lateral initiative of the USSR and Western al-lies. 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 pre-ventive measure to avoid confl ict and the re-surgence of fascism. Half of respondents know nothing of the purpose of the Berlin Wall.

RUSSIANS WERE ASKED WHETHER THEY REMEMBER WHY THE BERLIN WALL WAS ERECTED AND BY WHOM. THE OLDER GENERATION HAS A CLEARER UNDER-STANDING OF THIS HISTORICAL PHENOMENON.

WHO ERECTED THE BERLIN WALL?

SOURCE: WWW.WCIOM.RU

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 dissatisfi ed with elec-tions, says political analyst Dmitry Oreshkin.Some analysts believe that the parties most peo-ple see as “opposition” are in fact controlled by the Kremlin. “In 2002, the country was not as sta-ble as it is now, and many feared that a strong op-position 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 dif-ferent 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 ob-serves.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 Kon-stantin Simonov, president of the Centre for Cur-rent Politics.

MORE THAN 70PC OF RUSSIANS SAY THAT THE COUN-TRY 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

Sergei Markov is a State Duma deputy from United Russia

After United Russia held its convention in St Pe-tersburg on Nov. 20-21, in which “Russian Con-servatism” was the main motto, skeptics have been questioning whether conservatism is com-patible with President Dmitry Medvedev’s mod-ernisation programme. In my opinion, the two can be combined quite easily.Countries adopt their own types of modernisa-tion programmes based on their own specifi c po-litical culture, values and history. In Britain and the United States, for example, economic devel-opment 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 domes-tic producers and could lead to the loss of Rus-sia’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-

SERGEI MARKOVSTATE DUMA DEPUTY

CONSERVATIVE MODERNISATIONernisation model of Germany’s Christian Demo-cratic alliance after World War II, the tradition-alistic 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 Rus-sians for many of the same reasons that a conser-vative investment strategy is attractive to con-servative investors. They both provide stable growth with minimal risk.Russia’s history is fi lled with revolutions. Post-Soviet 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 focus-ing on preserving the country’s traditional val-ues: 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 sover-eignty. 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 protec-tor of the national idea.From the conservative perspective, socialist doc-trines lead to too much confrontation between various classes and social groups, whereas lib-eral doctrines lead to confl ict between the inter-ests of individuals and society as a whole. By con-trast, conservatism helps unite these groups. Rus-sian 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 at-tempting to link human rights with morality, uniting them in the concept of a person’s inalien-able rights and human dignity.But United Russia and the country’s leaders can-not focus only on these exalted values. They must

offer concrete solutions to concrete, everyday problems. The economic model of Russian conser-vatism needs to be further developed, but it should build on previous centrist policies and the fi rm leadership of Prime Minister Vladimir Putin as the head of United Russia. Putin’s conservative values include the ideas of order, law, moral legit-imacy, family, property ownership and religion.After living through the chaotic 1990s, it is un-derstandable why Russians seek comfort in the conservative model. They are tired of endless po-litical instability and economic crises. Now, the country must adopt a modernisation programme to develop society. With its backwardness, inter-nal 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 nec-essary resources to build it. -

At its recent meeting, the Presidential Commis-sion for Modernisation and Technological Devel-opment of Russia's Economy called for develop-ing a transport-energy module with a megawatt-class nuclear propulsion unit.President Dmitry Medvedev approved the proj-ect and promised to fi nd funding for it. Analysts say Russia could restore its status as a leading space power if it scores a breakthrough with nu-clear propulsion.Past experience shows that such expensive tech-nology is extremely difficult to develop. The Unit-ed States and the Soviet Union tried hard to make commercial nuclear propulsion units. The USSR came up with the 11B91 experimental nuclear en-gine, while the United States developed the NERVA (Nuclear Engine for Rocket Vehicle Ap-plication) system with a thrust of about four tons.In April 1964, a US Navy Transit navigation sat-ellite with a radio-isotopic generator on board, failed to reach orbit and disintegrated in the at-mosphere, spewing out over 950 grams of pluto-

YURY ZAITSEVRIA NOVOSTI

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

NUCLEAR-POWERED SPACECRAFT?nium-238. This was more than the total amount of plutonium released during all nuclear explo-sions by 1964.In January 1978, Kosmos-954, a Soviet Radar Ocean Reconnaissance Satellite (RORSAT) with a nuclear reactor on board re-entered the atmo-sphere. 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 nuclear-powered Soviet satellite Kosmos-1402 went down in the South Atlantic.The most serious threat involved Cassini-Huy-gens, 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 gravitation-al-assist fl yby 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 fi ve bn people could have got radiation poisoning had the spacecraft plunged into the atmosphere.On February 10, 2009, the Iridium-33 telecom-munications satellite owned by US company

Iridium Satellite LLC and its defunct Russian equivalent, the Kosmos-2251 with a nuclear pro-pulsion 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 po-tential nuclear explosions.If any of these satellites collide with debris, they will slow down and eventually re-enter the at-mosphere, spreading radiation above the Earth and on its surface.Since the 1978 Kosmos-954 crash, the Scientifi c and Technical Subcommittee of the United Na-tions Committee on the Peaceful Uses of Outer Space has always focused on the use of space-based 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 fulfi lled, 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 internation-al scientifi c community decided that it was im-possible to explore outer space without nuclear engines and reactors, which could be used to ac-celerate interplanetary spacecraft and to supply them with energy.Scientists must fi nd a way to ensure the radia-tion 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 reac-tors. Moreover, nuclear rocket engines emit pow-erful jet streams of radioactive exhaust, making it impossible to test and upgrade them on Earth. Consequently, it is still unclear whether inter-planetary spacecraft should be fi tted with nucle-ar rocket engines or solar-powered electric pro-pulsion units. -

First published inThe Moscow Times

BOOKMARKS14 RUSSIA INDIA REPORT

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

www.online-literature.com/anton_chekhov Chek-hov's bio, plays and short storieshttp://chekhov2.tripod.com/ 201 stories by Anton ChekhovReflections

A legacy to rival the mastery of Shakespeare

Of all great Russian writers, perhaps Chekhov, is best-loved. Unlike Tolstoy and Dos-toevsky, 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 Zhiv-ago says in Pasternak’s novel, Chekhov was far too modest for such weighty matters. He was content to remain an art-ist and focus on individual is-sues, many of which are now of wider concern. To borrow Pas-ternak’s image, they continue to acquire sweetness like rip-ening apples. The universal appeal of Chekhov’s work has increased – he is now the sec-ond most-performed play-wright after Shakespeare and writers of short fi ction regard him as their guiding light.Chekhov’s popularity also stems from a lack of preten-tion. As the son of a shopkeep-er, 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 impover-ished family. As he was invited to more prestigious publica-tions, 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 cor-nerstone of a pared-down lit-erary style notable for simple vocabulary and a complete lack of artifi ce. “Medical sci-ence has had a strong infl uence on my literary activities,” he acknowledged towards the end of his life; “it signifi cantly enlarged the scope of my ob-servations.” 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 univer-sality of their subject matter. Chekhov was Russian through and through, but the problems of human interaction he ex-plores transcend national boundaries. He wrote stories and plays about characters people can relate to. They are not larger-than-life personalities con-fronting extreme situations, but ordinary people with ordi-nary problems. As Chekhov re-minds us, self-deception is far

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 sin-cerely 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 Shake-speare guilty of exaggeration, philosophical maxims and un-likely scenes that destroyed the credibility of his characters and situations. But distinguished literary critics at the end of the

19th century accused Chekhov of just the opposite.One should recall that when Chekhov was young, Dosto-evsky was still alive and dream-ing of bringing church and state together, still instructing Russians about the great his-torical mission of world sym-pathy: to understand and love the truth of all people more deeply than they themselves. Moreover, Chekhov had al-ready written everything he was to write by the time Tolstoy was roaring about reorganis-ing Russian life according to the laws of early Christianity. In the theatre, symbolist dra-mas were the order of the day – Ibsen, Maeterlinck – with grandiose metaphors and sweeping statements about world problems. Quasi-realis-tic prose tried to keep pace. Maxim Gorky in his recalci-trant tramps hinted at a Ni-etzschean superman, and in his sensible workers, he was call-ing for revolution. Leonid An-dreyev tried to combine Real-ism with Symbolsim – running ahead of future plays by the ex-istentialists (Sartre, Camus, Anouilh).Everything was bubbling and glittering, there was promise of unheard-of changes, unprece-dented 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.

Chekhov was born in Tagan-

rog on January 17, 1860. He

was the son of a grocer and the

grandson of a serf who bought

his freedom. After school, Chek-

hov enrolled in the Moscow Uni-

versity, eventually becoming a

doctor. While practicing medi-

cine in 1886, he contributed to

St Petersburg daily Novoe Vre-mya and it was during this time

that he developed his dispas-

sionate, non-judgmental style.

In 1892, Chekhov bought an es-

tate in the village of Melikhove

and started writing full-time. Dur-

ing this time, he published some

of his most memorable stories.

In 1897, he fell ill with tubercu-

losis and moved to Yalta on the

Black sea. Chekhov wrote ex-

tremely quickly, often producing

a short story in an hour or less.

Chekhov died of pulmonary tu-

berculosis on July 2, 1904, in

Germany.

ROSAMUND BARTLETTSPECIAL FOR RIR

ALEXANDER MELIKHOVRIR

more frequently encountered in our lives than fulfi llment 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 con-front mortality at a young age. He could not hide the truth when he started spitting blood at 24; it was unlikely he would

reach old age. But his infec-tious sense of humour and un-erring sense of irony prevented his writing from ever becom-ing too sentimental, despite its note of elegy. The dramas which unfold in his stories and plays, with their muted cli-maxes, are rarely melodramas, and have the deceptive feel of real life.In his exquisitely subtle han-dling 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 rec-ognised 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 relation-ships which beget emotions that are half-ludicrous and yet painful, and that an inconclu-sive ending for these impulses is much more usual than any-thing extreme” – this was Vir-ginia 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? -

People who rise enough above their milieu to realise they are lonely, but not so lonely as to be-come 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 re-volts 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 trifl es, everything is fi lled with signifi cance; all you have to do is study it and recount what you see in Chekhov’s pre-cise and ascetic language. In the 1960s, when the sophisticated Soviet reader was going crazy over subtexts in Hemingway, noticing that even the most triv-ial exchange was fi lled with a mysterious depth if inserted into prose or drama, for me, it was only an echo of Chekhov. Hemingway himself consid-ered the “intelligent doctor” one of his teachers. (Chekhov also taught Dreiser, Sherwood Anderson, Fitzgerald and Tho-mas Wolfe). But Hemingway with his minimalist means glo-rifi ed the courage and staunch-ness that are required only in extreme situations, whereas Chekhov poeticised ordinari-ness; with a sad compassion, he portrayed the everyday life of the nice, not overly decisive person – and that person re-paid him with love and grati-tude. Chekhov loves us without demanding anything. The turn of the 20th century was a time of appallingly exag-gerated demands, in compari-son with which everyday pleas-ures and virtues seemed gray and lacklustre. But the 20th century itself brought so many disappointments in its pan-acean 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 charac-ters – 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 he-roes 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. -

RIR Dossier: Anton Chekhov

Chekhov’s unique literary talent still lives today

The depiction of simple lives as a high art form

“Chekhov’s popu-larity 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 he-roes of our time.

Rosamund Bartlett is a renown Chehkov scholar and transla-tor

Alexander Melikhov is a writ-er from St Petersburg.

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 dis-cussed here by Chekhov scholar Rosamund Bartlett and writer Alexander Melikhov.

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

15BOOKMARKS

The Millennium of Russia – a

bronze monument in the

Novgorod Kremlin. It was

erected in 1862 to celebrate

the millennium of Rurik's ar-

rival to Novgorod, an event

traditionally taken as a

starting point of Russian

history.

Present-day Veliky Novgorod, or “Great” Novgorod, is a quiet, un-spoilt place with its broad river and autumnal avenues. The sur-rounding countryside is easily accessible and is studded, like the town, with tall churches. Vis-itors who appreciate the beauty of simplicity are drawn to the whitewashed walls of these holy

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

Novgorod A city famed for its heritage and independent spirit

History’s great survivor“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.

PHOEBE TAPLINRIR

places. Inside, many of the old frescoes have been restored; out-side, the fl at marshlands, woods and water meet the sky.Novgorod was always ethnical-ly diverse and rivalled medieval Venice in its far-flung trading links. Today, there are interna-tional events almost every month and no doubt they will be partying again in three years’ time to celebrate the anniversa-ry 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 cele-brate the “Millennium of Russia”. Three hundred tons of metal have been wrought into more than a hundred fi gures. Novgorod first became a free city, independent of ruling Kiev, in 1019, under Yaroslav the Wise, who built the Cathedral of St Sophia and established Russia’s

fi rst school. Novgorod adopt-ed 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 in-side the fortified

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 ancient-ness. The onion domes that give the cathedral its characteristi-cally 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 in-side 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 the Virgin’s eye). The battle itself is commemorated in another famous icon, the fi rst to depict a historical scene: The Battle between the Novgorodi-ans 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. Histo-rians debate how free this early democracy really was, but the republican traditions of trade, literacy and cultural exchange certainly produced a fl owering

of art and music. Jewellery, manuscripts, woodcarvings and epic songs are celebrat-ed in the museum’s new ex-

hibition. Across the river from the Kremlin, Yaroslav’s Court

contains several old churches, but very little from its earliest days of

wooden palaces. A bronze sculp-ture 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 the Volkhov.Novgorod’s old marketplace has seen countless uprisings among the literate and independent peasantry. Full serfdom, as prac-tised elsewhere in Russia, never took hold in Novgorod and, even today, there is a refreshing sense of independence about local government initiatives. Aca-demic Nicolai Petro, whose book Crafting Democracy ex-plores the potency of what he calls the “Novgorod myth”, ar-gues that the area’s economic

FactsaboutVeliky Novgorod

1 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.

2 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.

3 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.

success, international links and political innovation have been fostered by “the local cultural tradition”.The city’s infrastructure is cer-tainly impressive. The streets

are swept and signposted, the parks are green and peaceful and the English-speaking Kra-snaya Izba tourist office is help-ful and polite. Tourism is among

the industries that have bene-fited from links with other countries and foreign invest-ment. Petro argues that the city’s success has been due to “astute usage of local historical symbols…” He quotes the mes-sage inscribed on a wooden plate from Veliky Novgorod which, roughly translated, de-scribes the city as the “source of Slavic liberty and Russian free-dom”. 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 incred-ible collection of churches from eight centuries has been turned into a series of museums. Fres-coes by the 14th-century Byz-antine artist Theophanes the Greek have been uncovered in the the Church of the Transfi g-uration of Our Saviour, at the end of the leafy Ilyina Street. The vibrant colours of the mu-rals 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 Tar-tars, is still a working monas-tery. Nearby, the Vitoslavitsy Museum of Wooden Architec-ture has restored buildings from across the region, ranged picturesquely on the shore of the Volkhov River. In the dis-tance, you can see the ruins at Gorodische, Rurik’s abandoned city, across the widening river and waving reeds. -

Veliky Novgorod was described as the “source of Slavic liberty and Russian freedom”.

Novgorod’s unique preservation plan

Although medieval Novgorod is hidden under an asphalt coating and the buildings of the present-day 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

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.

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No other Russian or Ukrainian city can

compete with Novgorod in the variety

and age of its medieval monuments

BOOKMARKS16 RUSSIA INDIA REPORT

IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_DECEMBER 09_2009Feature

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

To advertisein this supplement

contact

Julia [email protected]

fax +7 (495) 988 9213

In Russia, New Year’s celebra-tions are longer than most countries. There’s a certain lightness in the air, only enhanced by freezing tem-peratures. People walk with extra purpose, carry-ing shopping bags or bou-quets of flowers. Some, however, are walk-ing with no pur-pose at all, and a f ew are even lying in the street. These are the ones who started celebrat-ing early.Russians start thinking about New Year’s plans as

early as September. It is the most important day on the calendar, trumping all other holidays and even birthdays and anniversa-ries. This is probably a result of the Soviet calendar, which bumped traditional holidays in favour of ones that evoked more cynicism than celebration – In-ternational Day of Worker Soli-darity, for example. But New Year’s Eve – the only one of the eight public holidays not tied to communist imagery – was dif-ferent, a day everyone could be merry without paying lip serv-ice 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 Janu-ary 1, 1700 as the date mark-ing the country’s switch from the Byzantine calendar to the mod-ern one. The holi-day was abol-

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 New Year’s Eve are wild, di-verse and very promising. Long tables take over whole apart-ments, every inch taken up by plates bearing food of just about every description – some famil-iar, 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 style Vinaigrette, where beets and potatoes play the starring role, also makes an appearance. These two share the table with the poetically-named “herring under a fur coat”, where the fi sh is wrapped in a “fur coat” of grated beets,

potatoes and carrots – another holiday classic.Cold meats are everywhere: thick slices of ham, smoked sau-sages replete with big white spots of fat and, of course, meat in aspic, or “kholodets”, a dish which is made by painstaking-ly boiling down bones over a day or two to achieve a gelati-nous 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 pres-ence of pink, thinly sliced smoked salmon, pickled her-ring complete with crunchy on-ions, as well as sturgeon, which traditionally represents stabil-

ity and prosperity, is justifi ed. There are well-smoked sprats, slices of white fi sh and red cav-iar 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, fi lled with meat, potatoes and cab-bage. And of course, there are the good friends of any vodka drinker – pickled cucumbers, mushrooms, tomatoes and gar-lic – the perfect thing to pop into your mouth after a shot of the hard stuff.Traditionally, southern Rus-sians 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 fright-ened at all by the southern su-perstition that a winged animal may cause one’s luck to fl y away. To please both traditions, it’s possible to include both a suck-ling pig, complete with the rich

brown glaze that comes from fre-quent and care-ful basting, and a roasted goose with baked ap-ples. There are also several cakes,

including napo-leon, a New

Year’s must-have, juices and mors, a Russian drink made from berries. Mandarin orang-es abound, a Soviet tradition no one can really explain. Surpris-ingly, 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. Par-ents, kids and good friends get a mention as well.Before you know it, the televi-sion is showing the Kremlin clock tower striking midnight and the president is congratu-lating the country. Following careful instructions, everyone writes out a wish on a piece of paper, sets the paper on fi re 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 fi reworks, followed by some singing and a snowball fi ght, and then back to the table. What gives comfort to your aching head, however, is the

thought that there is no-where to hurry to – all

of Moscow, and the rest of the coun-try as well – will be nursing the same hangover. And when the h a n g o v e r i s gone, there are ten more days of vacation to do it all again. -

A grand dinner for a big dayCuisine The festive season never fails to provide heavenly meals

Salad Olivier Mushroom Julienne Herring under a fur coat Pickling tomatoes Tapas, Russian-styleMushrooms have a special place in Russian culture. Juli-enne is a standard appetiser for any holiday dinner.

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

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

Russians are used to pick-ling everything from garlic to watermelon. Tomatoes are an old favourite.

RecipesFavourite dishes forthe holiday dinner 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

This salad is the most tra-ditional dish for New Year celebrations in Russian homes.

www.rbth.ru

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?

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