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The Commonwealth of Independent States, a Rus-sia-led bloc of former Soviet countries, has sug-gested replacing former I.M.F. chief Dominique Strauss-Kahn with Kazakh Central Banker Grig-ory Marchenko.Marchenko is credited by many for Kazakhstan’s remarkable near-double-digit economic growth following the collapse of the Soviet Union, how-ever experts doubt his chances of actually being elected to the new job.

Senator Mikhail Margelov, the chairman of the Foreign Relations Committee in Russia’s upper house of parliament, has announced he will be traveling to Libya “in the nearest time” for talks on Colonel Moammar Gadhafi’s exit from power. Margelov is also due to visit the rebel stronghold of Benghazi to “help the Libyan elite find a na-tional concensus.”At the G8 summit in May, President Dmitry Med-vedev announced that Russia had been asked by its colleagues to help mediate talks with the Lib-yan leader, and Medvedev said Russia would use its contacts to help pursuade Gadhafi to step down.

C.i.s. Nominates Marchenko to head i.M.f.

Moscow to Mediate Libya Talks

OPiNiON

Entrepreneurs discover new opportunities in the less- saturated environment of Russia’s regions

Down in the MouthWhy are foreigners living in Russia more upbeat than the locals?

After repeated calls by Russia’s leadership to es-tablish visa-free travel with the European Union, the two sides are on the verge of signing an agree-ment that would significantly ease travel for law-makers, businessmen, journalists and other pro-fessionals, reported The Moscow Times. The new agreement would allow for five-year multiple-entry visas to be issued for both Russians and EU citizens.Russia and the EU are also on the verge of sign-ing a roadmap of “common steps” to the eventu-al abolishment of visas following requests for such a move by Spain last year. A call by Prime Min-ister Vladimir Putin for abolishing visas with the U.S. earlier this year received a lukewarm response from American officials.

russia and e.U. step closer to visa-free travel

Business Entrepreneurs bring the Russian incarnation of Cirque du Soleil to New York

For months, “Skolkovo” has been a buzz word in discussions of the Kremlin’s modernization program — the best indicator yet that the country is focusing seriously on moving away from its tradition-al role as an exporter of raw ma-terials. Founded in an area that was once a hub for the Soviet de-fense industry, it is intended to reflect the needs and hopes of Russia in the 21st century.

Money is pouring into the proj-ect, from both government and independent sources. According to Skolkovo Foundation Vice Pres-ident Stanislav Naumov, the total budget for establishing the cen-ter — including construction, in-frastructure and co-financing of projects — will be $1 billion. The state has provided two-thirds of this, but the center has promised to repay the government in full

Skolkovo Rises Outside Moscowinnovation Experts question whether a technology hub can shift the focus of Russia’s economy

in seven or eight years. The prom-ise of independent financing is important for Skolkovo Founda-tion members, who fear that the project will be viewed as yet an-other opportunity for graft by Russian government officials. In-stead, the Skolkovo model is a bit of a utopian microclimate for investment in a country known as a big risk for investors, and hopes are high for its success. “Skolkovo should spawn a Gaz-prom of its own,” said Naumov, referring to Russia’s largest com-pany. “[It] will become the con-ductor of an orchestra consisting of start-ups and investors.”

Despite the ongoing tension over government involvement, Skolkovo is something of a pet project of President Dmitry Med-vedev, who recently held a press conference at the center. “I hope the whole world comes to know this brand, not as the only place where investors should put their money,” he said, “but because any big development undertaking needs to have its main engines that drive the whole process.”

CONTiNUeD ON Page 5

Cirque du Soleil has contorted its way into a new, surreal drama called Zarkana, which is said to come from a combination of the words arcane and bizarre. Cirque has pumped up the volume on its sensational spectacle with a nar-rative somewhere between Phan-

arTeM ZagOrODNOvSpECial to Rbth

aLexaNDer vOsTrOv, DMiTry rODiONOv Rbth

The first joint venture between a western entertainment company and the Kremlin Palace Theater debuts tomorrow at radio City Music Hall.

This “city of innovation” on the outskirts of Moscow is derided by some as a pipe dream, but embraced by russia’s leadership as an engine of modernization.

CONTiNUeD ON Page 4

Beyond Moscow

Page 6

ners. More significantly, it has em-ployed 800 people and used 320 Russian suppliers.

“Cirque du Soleil is amazing. It’ll be in New York; it’ll be in the Kremlin,” said Craig Cohon. “We’re the first Western entertain-ment company to partner with [the Kremlin].” The Cohons are applying the same principles to their entertainment venture, now said to be an investment of $57 million, that they used for Mc-Donald’s and Coca-Cola.

Performers practice for the debut of “Zarkana” in New york’s ra-dio City Music Hall on June 9. The show will then come to Moscow.

tom of the Opera and anything by Tim Burton. This edgy story of creatures in an abandoned the-ater, told through acrobatics, lights and the European-inspired varieté, could not have happened without father-and-son partners George and Craig Cohon, the businessmen who first brought McDonald’s and Coca-Cola to Russia.

Zarkana opens at Radio City Music Hall this month (with per-formances scheduled through Oc-tober) and closes at the Kremlin Palace in 2012. Few of its other

venues will be large enough to carry the whole show, and will feature excerpts instead.

The Cohons partnered with Cirque du Soleil in late 2008 to create Cirque du SoleilRus, a Rus-sian company with exclusive rights to the Russia and Ukraine markets. The company is market-ed as a Russian company led by Russians, for Russians. In two years, the company has invested $42 million dollars into the Rus-sian economy, according to Cirque Web site. Another $12 million has been spent on sponsor and part-

WEdnEsday, JunE 8, 2011

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President Dmitry Medvedev visits an exhibition of skolkovo projects in Moscow.

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Russian Election Cycle Opens WithMedvedev Press Conferencehttp://rbth.ru/12894politics & society

tandem National parliamentary and presidential elections are less than a year away

Slowly but surely, the 2011–2012 election season in Russia is get-ting underway. In recent weeks, both President Dmitry Medvedev and Prime Minister Vladimir Putin have made appearances that pundits described as the be-ginnings of an election campaign, and analysts are watching close-ly to determine whether the tan-dem will remain in place after March 2012.

On May 6, during a congress of the ruling United Russia party, Putin announced the creation of the All-Russia Popular Front. This organization will be made up of trade unions, business associa-tions, youth groups and Kremlin-friendly N.G.O.s and is intended to improve United Russia’s pop-ularity by giving it more of a con-nection to ordinary people.

The new organization will in-clude “everyone who is united in their common desire to strength-en our country, united by the idea of finding optimal solutions to the challenges before us,” Putin said in his announcement.

Medvedev immediately gave the pundits reason to speculate that there was discord between the president and the prime minis-ter when he declined to endorse the Popular Front idea.

“I understand the motives of a party that wants to keep its in-fluence over the country. Such an alliance is justified from an elec-tioneering point of view,” Med-vedev said in televised comments. Medvedev also speculated that United Russia could not count on a landslide in December’s State Duma elections, saying that competition is vital in a democ-racy. “No one political force can regard itself as a dominant one, but any force should strive for maximum success,” Medvedev said.

Medvedev promoted his own agenda during a massive press conference at the Skolkovo In-novation Center on May 18. An-swering questions from an au-dience of more than 800 journalists, Medvedev comment-ed on topics ranging from mod-ernization to gubernatorial elec-tions to missile defense. His responses were mostly predict-able, but the conference showed him to be comfortable, confident and in command of the issues — the kind of person who could head a successful presidential campaign.

every man for himself?Some analysts see Medvedev’s

actions as more proof that he is further distancing himself from Putin — a process that began with his criticism of the prime minis-ter’s comments on the prison sen-

the art of the possibleappearances by medvedev and putin suggest the election season has begun, but their actions seem designed to keep voters and pundits guessing.

combined reportsRussia BeyoNd the headliNes

tences of Mikhail Khodorkovsky and Platon Lebedev and contin-ued with the leadership’s differ-ing of opinion over NATO inter-vention in Libya.

“This is a major development, which marks an independent move by Medvedev,” said analyst Dmitry Oreshkin, discussing the situation with Bloomberg.

The theme of Medvedev’s au-tonomy echoed in comments

about his reaction to the creation of Putin’s Popular Front.

“Medvedev is trying to dem-onstrate his independence with those remarks,” said Alexei Ma-karkin, a political analyst with the Center for Political Technol-ogies, in an interview with The Moscow Times.

Analysts who believe the tan-dem is indeed splitting believe that the Popular Front is Putin’s

way of returning to the presi-dency.

“If they [establish this new grouping], then we can say that Vladimir Putin will be nominat-ed precisely by this ‘popular front’ — that is, by all Russians who are for a better life,” said politi-cal scientist Grigory Golosov.

Ekho Moskvy’s Alexander Venediktov agreed. “This story shows us again that Vladimir

Vladimirovich [Putin] certainly has not said no to a third presi-dential term,” Venediktov said in comments to the BBC.

Those who believe the tandem will continue past 2012 say that the recent appearances have given Putin and Medvedev the oppor-tunity to define their different but complimentary personas — Med-vedev the “modernist” and Putin the “traditionalist” — in hopes

that one or the other will appeal to Russia’s increasingly divided voting population.

“Like before, Putin and Med-vedev tend to occupy different political niches,” said indepen-dent political analyst Stanislav Belkovsky to Interfax. “Both con-tinue to serve their common cause.”

Opposition politician Vladimir Ryzhkov even suggested that Pu-tin’s Popular Front initiative was in fact intended to shore up the tandem. “[Putin] is attempting to halt rapidly eroding support for the ruling tandem and the “party of power,’” Ryzhkov wrote in an editorial in The Moscow Times.

Television analyst Nikolay Svanidze echoed these comments. “All this doesn’t necessarily mean that it is Putin who will stand for president next year. I believe that the tandem has not yet made a final decision regarding who is going to run. If such a front is formed, Dmitry Medvedev may use it just as easily. The new plat-form will make it possible for ei-ther of the two candidates to de-clare that he is backed by a considerable part of the people,” he said in an interview with RT TV.

Any candidate for the Russian presidency in 2012 may have to pay more attention to the people than previously planned. Accord-ing to an April Levada Center poll, 75 percent of Russians are interested in politics. But 83 per-cent of respondents believe that politicians work only to promote their own interests and ignore the needs of voters.

Reporting by Business New Eu-rope, Interfax, Kommersant and RIA Novosti was used in this re-port.

putin and medvedev are both seen as contenders for the country’s top leadership position next year.

youth Vote With Cell Phonesyoung guard, the youth wing of the ruling united russia party, is urging people to vote with their wallets by sending text messages in support of candidates to run in the upcoming state duma elections.

“I am calling on you to fork out 1.50 rubles for a text message and vote for me,” Maria Butina, 22, a hopeful in the Altai region, wrote on her LiveJournal blog. “Togeth-er we can make the world better for the profit of all.”

Another candidate wrote on Vkontakte.ru: “Please send a text message to 2420” because “to win, I really need your help!”

An unprecedented open prima-ry election is under way within Young Guard for candidates be-tween the ages of 21 and 35 to

run on the United Russia ticket in December’s vote.

The absence of a requirement that contenders be members of United Russia or Young Guard, the youth wing of the party, seems to have attracted some young peo-ple who don’t necessarily support United Russia, but are ready to use the party to get into power.

“Of course, I have no illusions about the existing regime and the ruling party,” Butina wrote. “But if I want to change anything for the better, I must act in the only way possible today — within United Russia.”

While eligible candidates are not required to join Young Guard or United Russia, they must sup-port their policies and be Rus-sian nationals, according to the Web site for the primary election, MP2011.ru.

Mobile phone voting will be one

natalia krainovathe MosCoW tiMes

of the criteria by which a public commission will choose winners from the primary election, said Artyom Turov, who is coordinat-ing the voting effort. The other criteria will be candidates’ elec-tion platforms, their meetings with voters, and the number of signatures they manage to col-lect in support of their candida-cies, Turov said.

The Young Guard primary elec-tion started April 27 and will end June 19.

The winners will be chosen from June 19 to 25, and a portion of them will participate in Unit-ed Russia’s primary election in July.

Those who win United Russia’s primary election will be placed on the party’s list for the Dec. 4 Duma vote.

A United Russia spokeswom-an said the program for the July

primary election has not been fi-nalized, so she was unable to co-ment on it at this time.

Turov said Young Guard win-ners who do not take part in the Duma primaries would partici-pate in primaries for 28 elections to regional legislatures that would also take place on Dec. 4.

Young Guard’s primary elec-tion is being held in 75 of Rus-sia’s 83 regions. In each region, two or more winners will be se-lected, depending on the number of voters in the region.

United Russia first held a pri-mary election to select candidates for the 2007 Duma elections, but only members of the party or Young Guard were allowed to take part.

In the past five years, more than 10,000 members of Young Guard have become lawmakers at vari-ous levels of government, said

Young Guard senior official Timur Prokopenko, speaking to about 5,000 activists at a Moscow rally in late April where he announced the start of the primary elec-tion.

The voting text messages, which will actually cost 1.44 rubles (5 cents) per vote, will generate a small profit for several mobile phone operators and the compa-ny that created the online voting service, but none of the proceeds will return to Young Guard, said Ivan Khmelevskoi, head of the public relations agency Vektor Rosta, which was hired by Young Guard to develop the Web site for the primary election.

He said Vektor Rosta was work-ing for Young Guard free of charge, for self-promotional pur-poses meant to “show [future] cli-ents that we successfully imple-mented a project.”

human rights Presidential commission indicates that security services officers fabricated Magnitsky charges

The metal cage used for prisoners in courtroom No. 14 at the Tver-skoi regional court was empty dur-ing a recent hearing, its door wide open, when the court considered the arrest of Ivan Cherkasov, a se-nior executive at British invest-ment fund Hermitage Capital.

Cherkasov, who lives in London, said he has no intention of return-ing to face the charges of tax eva-sion he said are false. He said his arrest is revenge by rogue forces in the Russian security services.

Just days before, an independent commission set up by President Dmitry Medvedev said that the charges in the case of Russian law-

president dmitry medvedev’s presidential commission has decided that authorities exceeded their official powers in the case of slain lawyer sergei magnitsky.

yer Sergei Magnitsky were fabri-cated and that Interior Ministry and F.S.B. security service officers were at least partly responsible for Magnitsky’s 2009 death in pris-on.

Magnitsky alleged tax fraud by the authorities and then was charged with the same crime. He died after 11 months in pretrial detention and after repeated re-quests for medical treatment.

The findings of the presidential commission are in a preliminary report that was leaked to Russian newspaper Vedomosti and then confirmed by commission mem-bers.

Magnitsky was working for Her-mitage Capital when he uncov-ered what he claimed was a $230 million tax refund scam set up by a group of corrupt police and tax officials.

“When Sergei Magnitsky testi-fied against the police officers, the same officers put him in pretrial

detention, tortured and killed him,” said Hermitage Capital C.E.O. Wil-liam Browder in a telephone in-terview from London.

Magnitsky’s death became an international cause célèbre, and Medvedev has staked much on in-vestigating the case.

Kirill Kabanov, head of the Na-tional Anticorruption Committee, is working on a separate part of the report. He said pressure has been relentless.

“There are several officials well known in politics who have stat-ed openly that they don’t give a damn about our investigation,” said Kabanov. “This is wild, brutish arrogance. They aren’t puppets; they are players. And the [securi-ty service] isn’t prepared to sur-render its employees, partially for the fact that they know a lot and could tell people. In addition, there is huge money at stake.”

The final report is set to come out next month. Irina Dudukina,

representative for the Investiga-tive Committee of the Ministry of Internal Affairs said, “We cannot comment on the findings until we see the official conclusion of the [presidential] commission.”

Officials from the Butyrka jail, where Magnitsky was denied med-ical help, were fired. But there have been no arrests or direct police in-vestigation of the officials accused of corruption.

soured relationshipHermitage Capital was once

one of the most enthusiastic of

Kremlin cheerleaders. Since its head, William Browder, was re-fused entry to Russia in 2005, it has been a strident critic.

Hermitage Capital has spent an enormous amount of time and money on its own investigation of the officials involved in the alleged tax fraud. A series of vid-eos have been released, most no-tably documenting lavish pur-chases made by the officials.

The most recent video creat-ed by the company accused a tax official who approved the tax refund of wiring millions

into a Swiss bank account opened in her husband’s name. It also chronicles the purchases of luxury property in Dubai and Montenegro valued at more than $20 million, although the offi-cial and her husband have an annual salary of only $38,000. Swiss authorities froze the ac-count after complaints by Her-mitage.

At the end of the recent hear-ing, the court backed investiga-tor Lieut. Col. Oleg Silchenko (who handled the Magnitsky case) and sanctioned the arrest of Cherkasov.

Silchenko refused to comment afterward, but he did throw out the phrase, “Who knows where I will be soon?” — a fairly com-mon remark in a country where people are not used to planning too far in the future.

But it is a question with spe-cial resonance and poignancy in this case.

“After this report [was leaked], we started to be pressured by security officials,” said presiden-tial adviser Valery Borschev. “They call me and ask why we are attacking Silchenko, and I answered that we are simply lay-ing out the facts. We are striv-ing for real punishment for those who are guilty, and we have only touched the tip of the iceberg at this point. Important figures stand behind the investigators and tax officials. We hope to get to them.”

New Twist in Case of Lawyer Sergei Magnitsky

kirill kabanov, head of the national anticorruption committee

galina masterova,vladimir ruvinsky sPeCial to RBth

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Moscow’s Green Office Space http://rbth.ru/12478 special report

green technology Businesses — both big and small — are betting on Russia’s untapped potential to save power

efficiency inches way into energy policy

billionaire mikhail prokhorov demonstrates his company’s yo-mobile, russia’s first hybrid, to reporters.The Russian government’s $300 billion energy-efficiency program is designed to trim the fat from Soviet-era factories and build-ings, signaling new efforts at a green-energy revolution.

“The political winds have changed at the top, and there is a growing consensus that climate change is happening, [creating] a will to change and build a more efficient economy,” said Kevin James of the London-based in-vestment adviser Climate Change Capital.

The summer of forest fires in 2010 helped bring Russia to the realization that climate change may not be entirely positive. (Prime Minister Vladmir Putin once famously quipped that glob-al warming meant Russians would spend less on fur coats). And Pres-ident Dmitry Medvedev has taken a much tougher line on the envi-ronment, his ideas supported by a report from the World Bank, which said that improving ener-gy efficiency will improve the country’s productivity and com-petitiveness.

In the environmental sphere, the country lags far behind China, which is already the world’s lead-ing manufacturer of wind tur-bines and solar panels and is on track to produce the world’s first completely battery-powered car.

Russia’s lack of focus on green issues is partly due to the fact that it is the world’s biggest oil and gas producer, and cheap gov-ernment-capped domestic ener-gy prices have drained any mo-tivation for energy conservation. Now, however, Russia has begun efforts to decrease its dependence on oil, from phasing out the use of incandescent light bulbs to state support for billionaire Mikhail Prokhorov’s project to build a hybrid car plant in Togli-atti, Russia’s domestic auto cap-ital. The state has also announced

every year, russia wastes enough energy to power the French economy, but new evidence suggests that the kremlin is determined to change its ways.

rachel morarjeeBusiness new euRope

plans to build eight plants that will produce energy-saving lamps, and the first Russian solar plant is slated break ground in the North Caucasus resort city of Kislovodsk this year.

Rostovteploelektroproyekt, a Russian company specializing in the design of energy plants and equipment, also has plans to develop wind and solar power worth almost $300 million in the Kras-nodar region. The wind project could start as early as next year.

Russian energy giant Rus-Hydro already has plans to build a wind-power park in the city of St. Petersburg. Meanwhile, hy-dropower has also gained ground. Late last year, Italian energy giant ENEL and RusHydro signed a cooperation agreement to work on renewable power projects, in-cluding tidal and geothermal power projects.

Additionally, Russia’s Natural Resources and Environment Min-istry has drafted a bill to promote recycling. The legislation would require factories to recycle the material they currently throw away.

There is still a long road ahead before Russia is truly green, and despite much recent hype, this would also not be the first time the Russian government has drafted laudable plans but failed to act on them.

Vladimir Chouprov of Green-peace said there was “a big line of industrial companies wanting to modernize their operations and raise efficiency,” but that many at the top, including Vladimir Putin, remain skeptical of climate change. “The government is not green,” he said, “and many poli-cies are anti-environmental.”

However, a grassroots environ-mental movement, fueled by local recycling activists, has emerged in Russia’s bigger cities, demon-strating that ordinary Russians are interested in environmental issues. The group No.More.Trash, which began in St. Petersburg in 2004, now has thousands of vol-unteers involved in cleaning up 29 Russian cities.

When Kevin James at Climate Change Capital moved to Mos-cow in 2005, he hoped his com-pany would be at the vanguard of a movement to make money out of cleaning up the country’s Soviet-era factories. Instead, the company pulled out of the coun-try after just four years, frus-trated by infighting among gov-ernment minis tr ies over whether the country should sell any of its carbon credits in re-turn for reducing emissions.

“We tried to pull off three or four environmentally friendly projects in Russia, but there was a policy morass at a national level, which held us up,” James said.

However, it appears he may simply have been too early, with the country’s carbon trading market now finally starting to move.

Last year, Russia gave the green light to 15 projects aimed at cutting emissions in sectors ranging from paper factories to chemicals to power generation. The 30 million tons of carbon

Russia may be associated more with long, dark winters than sun-drenched days, but that is not stopping private companies from tapping into a growing market for solar energy.

“There was an opinion that it’s better to use solar energy in coun-tries where there’s a lot of sun,” said Marat Zaks, chief executive of Solar Wind, a Krasnodar-based solar panel manufacturer. “But the fact is that there’s a lot of sun in Russia as well. Germany is the world’s number one solar energy consumer. But is Germany a sunny country?”

Solar Wind produces panels mostly for export but hopes to see the domestic market grow.

“If we get an order from a Rus-sian customer, we try to complete it quickly to aid the market de-velopment in the country,” Zaks said.

A number of Russian private companies are creating joint ven-tures with Rusnano, the state technology corporation, to ad-dress local needs.

Solar Wind is starting a $160 million project, with Rusnano as a partner, in which it will make double-sided solar panels — which collect solar energy from both sides — for domestic use. Zaks said there are only a few companies making such panels.

The plant, which is slated to begin production this quarter, will have an annual manufacturing capacity of 30 megawatts at the beginning, and will eventually ramp up to 120 megawatts per year.

The volume of Solar Wind’s do-mestic sales is still much smaller compared to exports, Zaks said, though he declined to name the percentage. He said private firms and regional governments are his local customers. In addition, the company exports solar panels to more than 22 countries, includ-ing Germany, Britain and the United States.

Industry insiders said solar en-ergy could become a real alter-native for traditional energy sources in a number of the coun-try’s regions.

“The Krasnodar region and

after a slow beginning, russia is finally learning to take advantage of the carbon credits it has been allotted by the kyoto protocol on harmful emissions.

the use of solar energy in russia, though still nascent, is considered a promising alternative power source. at least one region is tapping this potential.

credits that the projects create among them could raise as much as $300 million on the open mar-ket. A second group of projects is currently awaiting government approval.

Russia’s ratification of the Kyoto Protocol in 2004 commit-ted it to the United Nations pro-gram to reduce global emissions of greenhouse gases. Carbon credits, in essence, are a carrot

to encourage countries to imple-ment the targets by putting a monetary value on those emis-sions. At the same time, the pro-gram gives developed countries the opportunity to invest in re-ducing emissions in developing countries, which is seen as a cheaper alternative to fulfilling Kyoto targets at home.

Thanks largely to the collapse of the Soviet Union and much of its heavy industry, Russia’s

Carbon Trading Market Finally Takes off

Harvesting the sun’s northern exposure

tim gosling Business new euRope

irina Filatova THe MosCow TiMes

“we tried to pull off three or four environmentally friendly projects in Russia,” said Kevin James of Climate Change Capital in Moscow. “But there was a policy morass at a national level.”

a rare example of solar power usage in the novosibirsk region

most parts of Siberia have inso-lation levels [average exposure to the sun’s rays] comparable to the south of France and central Italy, where solar energy is currently booming, while the Zabaikalsky region gets more solar energy than Spain,” said Vasily Malakha, head of the environment monitoring department at the Electricity and Energy Council of the Common-wealth of Independent States.

The Krasnodar region started paying attention to solar energy after it launched an energy-effi-

ciency target program in 2006. The region is using solar panels not only for electricity produc-tion but also for heating water. The roof of the central hospital in Ust-Labinsk, a town northeast of Krasnodar, has been covered with 300 solar panels. The instal-lation will heat water for the hos-pital’s daily needs year-round, said Alexander Kiselyov, deputy chief doctor of the hospital, add-ing that the solar panels have the capability to heat a daily water supply for the facility.

Solar energy use has a future in Russia, but this kind of ener-

gy should be used only in com-bination with other renewable energy sources, said Brigitte Schmidt, a board member of Eu-rosolar Deutschland, the German division of the European Asso-ciation for Renewable Energy.

Solar energy has had difficul-ty establishing a foothold in Rus-sia because of the country’s focus on oil exports. There are other obstacles as well, such as the high cost of solar power station con-struction compared to tradition-al power stations. The construc-tion cost of a solar power station ranges from $10,000 to $17,000 per one kilowatt of installed ca-pacity, said Malakha. In compar-ison, a kilowatt of installed ca-pacity at a nuclear power station costs up to $3,000, while the fig-ure for a hydroelectric power sta-tion is just $1,000.

That makes building solar power stations less effective for Russia’s economy than construc-tion of traditional power stations, said Yevgeny Nadezhdin, of Unesco’s Sustainable Energy De-velopment Center, adding that hydroelectric and biofuel energy generation are the best options for the country. Despite the en-thusiasm of entrepreneurs such as Zaks of Solar Wind, building solar electric power stations around Russia is unlikely to be economically viable over the com-ing 30 years, according to Nadezhdin.

carbon emissions have remained around 1990 levels. Meanwhile, many officials have held the be-lief that the country’s carbon credits should be reserved to allow future economic growth, rather than sold to investors in return for emissions cuts.

Then came the financial cri-sis in 2008, when officials also struggled to see the value in rais-ing money through emissions cuts when the country was awash with cash. That attitude changed once the cash stopped flowing.

Bankers say the first tender to identify the 15 pioneers was a test run, and if it goes well, more projects will go forward. How-ever, the original hopes of inter-national investors that Russia could issue as many as 300 mil-lion tons of carbon credits and generate a market worth as many as $3 billion have faded, as the future of carbon trading beyond 2012 is uncertain.

“Kyoto ends in 2012, so there’s limited time for additional proj-ects, but there is still the chance to use the revenue they can raise for key priority areas in Russia.” said one banker working in the sector who asked not to be in-dentified. “The clear advantage of the carbon market is that it would provide additional financ-ing for energy efficiency.”

where does the power come From?Most of Russia’s power comes from thermal, hydro and nuclear sources. A miniscule 2 percent is from solar and other renewable sources of en-ergy (excluding hydro power).

nuclear16%

hydropower16%

thermal68%

50,000 preorder russian hybridMore than 50,000 potential cus-tomers submitted advance orders

for Mikhail Prokhorov’s Yo-Mobile hybrid in the first 24 hours after Yo-Auto, the joint venture developing the car, started accepting requests on its Web site.Unveiled to great fanfare in De-cember, The Yo-Mobile will be Rus-sia’s first hybrid, and has been lauded as an example of Russia’s innovative future. This joint project of Prokhorov’s Onexim Group and Yarovit Motors has benefited from a richly backed public-relations campaign, including an endorse-ment from Prime Minister Vladi-mir Putin, who drove a prototype

to a meeting with President Dmitry Medvedev.The interest does not necessarily re-flect future sales, however. A pre-order does not amount to a com-mitment to buy a Yo-Mobile, but prospective customers who register will be given priority if they want to sign a contract to purchase at a later date.The electric hybrid is advertised with a maximum speed of 120 ki-lometers per hour and the ability to go 100 kilometers on 3.5 liters of fuel.The Yo-Mobile is offered on the company’s Web site as a five-door hatchback, a “crossover” and a min-

ivan, all of which retail starting from 360,000 rubles ($12,800). More ex-pensive versions are dual-fuel, al-lowing drivers to fill up on either gasoline or natural gas.Eighty-two percent of orders re-ceived in the first 24 hours were for the crossover version. Fifteen per-cent were for the hatchback, and only 3 percent for the minivan.The foundation stone for the new Yo-Mobile factory will be laid in St. Petersburg next month, and cars are expected to roll off the produc-tion line in the first half of 2012.

Originally published inthe moscow times

solar power station construction is expensive compared to traditional power stations.

place is taken by Russia in the pro-duction of renewable energy, even though it sinks to 56th place glob-ally when hydroelectric power is not taken into account.

of Russia’s economically feasible re-newable energy potential is current-ly realized (179 terawatt hours out of a possible 1,823 terawatt hours).

of Russia’s energy is to come from renewable sources by the year 2020 according to a state program an-nounced last year.

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Counting by Millions and Billions http://rbth.ru/13001business

economy in brief

Russia is no longer an emerg-ing market according to the cash-strapped European Union (E.U.), which wants to get rid of the preferential trade terms implemented in the 1990s to support Russia’s transformation into a free-market economy.The E.U.’s executive body has announced plans to exclude middle-income countries such as Russia and Brazil from spe-cial rates, according to the E.U.’s General System of Preferences (G.S.P.). The decision to cut ben-efits is viewed as the most sig-nificant revamp of the trade sys-tem since the preferences scheme was first introduced. “Global economic balances have shifted tremendously,” E.U. Trade Com-missioner Karel De Gucht told reporters. “If we grant tariff preferences in this competitive environment, those countries most in need must reap the most benefits.”

russia moves beyond emerging market status

The Russian government has signed four car assembly agree-ments with a total investment of over $5 billion, including $1.1 billion which Fiat plans to in-vest in the expansion of a local automobile factory and the cre-ation of a factory to produce en-gines. “Up to 100,000 modern car models will be produced in the volume of up to two million a year,” Dmitry Levchenkov, head of a special economics zones and project finance department of the ministry, told reporters.

He said the investment would be made within three or four years.

Russia was about to overtake Germany and become Europe’s biggest car market before the 2009 crisis halved its annual sales. They recovered last year aided by a government-spon-sored cash for clunkers scheme, and industry analysts now ex-pect Russia to become the sixth-largest global auto market by 2020, up from its current posi-tion as No. 10.

foreign carmakers to invest over $5 billion

Serving up Chinese food with lashings of mayonnaise for his Russian clients, restaurant owner Liu Yanzhao is one of many Chi-nese entrepreneurs hoping to make money in Russia’s Far East.

“In the old days, Russia was like China’s big brother,” said the 26-year-old owner of the White Nights restaurant in the Russian border town of Blagoveshchensk. “We all looked up to Russia, but the relationship has changed.”

Liu is one of the many Chinese businessmen who are hoping to make money in the resource-rich expanses of Siberia and the Far East. With thousands of miles of unexplored forest and tundra, and only 6.7 million people, Rus-sia’s Far East is sparsely popu-lated. But what it lacks in popu-lations, it makes up for in natural resources — with rich seams of iron ore, rare metals, gold and coal, which China needs to feed its economic growth.

Relations between Russia and China, which fought a border war in 1969, were marked by mutual suspicion for a period of time. In the past this hampered cross-bor-

investment Chinese investors explore resource-rich Russian territory

china’s insatiable demand for raw materials is driving infrastructure development in russia’s most remote regions.

der economic cooperation, but the benefits of trade and investment are beginning to erode old enmi-ties. Chinese investors have set up special economic zones in places such as the Amur Region and the Primorye and Khabarovsk territories, as well as the Jewish Autonomous Region, investing $3 billion in various new projects. According to Russian press re-ports, that compares with less than $1 billion in direct state in-vestment allocated for the same areas by Moscow in 2011. The

Russian government has said that it wants to invest $100 billion to develop the region over the next five years, and that China will be a key partner in building roads, railways and ports. Said Boris Krasnojenov, metals and mining analyst at Renaissance Capital, “We know that Russia needs to cooperate with another country to open up the Far East, and the natural partner is China, which has far more financial resources than either Japan or South Korea.”

China Invests in Russia’s Far East

rachel morarjeeBusiness new euRope

cirque du soleilrus debutsin new york with zarkanaIn 1976, George Cohon, an Amer-ican transplant to Canada, ran into a Soviet delegation to the Montreal Olympics. This was perfect networking for the chairman of McDonald’s Canada, who had an idea to bring the famous fries to the Soviet Union at the height of the Cold War. He didn’t anticipate it would take him almost a decade and a half to cajole a skeptical Communist bureaucracy into al-lowing him to open one McDon-ald’s.

When his restaurant finally opened on Pushkin Square in the heart of Moscow in 1990, more than 30,000 people showed up on the first day, clamoring for a taste of capitalism. Years later, some Muscovites still recall the event fondly.

Russians have a habit of say-ing they hate McDonald’s, but just try getting in line on a Sun-day afternoon.

From the beginning, George Cohon had the instinct to make it a people’s burger joint, start-ing his own revolution in service, cleanliness and, more controver-sially, fast food.

“There were these restaurants back then that had long lines for customers with rubles and prac-tically no lines for people with [dollars],” the 73-year-old Cohon recalled over lunch at the glitzy Ararat Park Hyatt hotel in Mos-cow. “We didn’t do it that way. We put the ‘rubles only’ sign out-side.” Cohon now has 280 res-taurants in Russia and 25,000 employees. And he notes that 80 percent of what he sells is do-mestically produced, an incon-ceivable statistic in Soviet times.

Cohon’s son, Craig, worked as a top executive for Coca-Cola during its introduction to the newly opened markets of East-ern Europe in the 1990s.

“It took 14 years to bring Mc-Donald’s to Russia, four years to set up Coca-Cola distribution and production, and eight months to get Cirque de Soleil rolling,” said George Cohon.

“I think that’s a good barom-eter for the ease of doing busi-ness here.”

risk friendlyThe Cohons have been outspo-

ken advocates of doing business in Russia and are dismissive of the concerns of more risk-averse entrepreneurs.

“I was here when tanks shot at the [Russian] White House in 1993,” said Craig Cohon. “We con-tinued business. I signed the lat-est deal in the Kremlin last month, half an hour before the bomb went off at Domodedovo [Air-port]. That’s just a part of life.”

“I could easily picture myself as a Russian investor in the U.S. saying, ‘I was here during the Oklahoma City Bombing, 9/11 and the Arizona shootings and we continued business,” he con-tinued.

Said Dmitry Butrin, business editor at leading daily Kommer-sant, “Business is often far away from dramatic political events. As long as an owner is physical-ly able to continue running a store or restaurant, he will do so

even in the bleakest times. This is true for all countries.”

Craig Cohon said the key to success in Russia is three pronged: first, a commitment to the long-haul for real returns; second, cul-tivating personal relationships; and third, not managing from afar. “It’s a handshake market,” he added.

The Cohons said they have never been asked for a bribe, a common complaint of both Rus-sian and expatriate businessmen. “It could be because we have maintained our core principles from the start,” said Craig. “We’re here for the long term, we build relationships, we hire locals and we help develop other sectors like agriculture.”

George Cohon emphasized that philanthropy is another critical component if you want to be taken seriously.

“You’ve got to do charity,” he said. “A lot of my friends want-ed to come to the opening of the first McDonald’s here. I said, ‘Okay. You pay for your own air-fare, hotel and meals. And then you cut me a check for $10,000. All that money went to the first Soviet charity for kids. Now we’ve got our own charity that converts unused rooms in chil-dren’s hospitals to apartments so

parents can stay with their kids. It’s good stuff.”

all in the familyAt the end of the 2010 Winter

Games in Vancouver, Craig Co-hon’s two children, 10 and 12, participated in the ceremonial handover to the Russians orga-nizing the next Winter Games in Sochi. Said Craig, “I think that’s the perfect archetype for the last 30 years of my life.”

Both men said they are opti-mistic about Russia’s future at the moment. “By 2030,” Craig said, “I see four key points of de-velopment: the middle class learning to defend its rights via the evolution of strong political parties; business moving away from raw materials and invest-ing into manufacturing and high tech, which is already happen-ing; culture developing with a local base, as opposed to being imported from the West; and Rus-sia becoming a leader in anti-terrorism efforts together with the U.S. and India.”

George, smiling, said he was looking forward to it all: “I’ll be 93 then.”

For more information about Zarkana, visit cirquedusoleil.com/zarkana.

after bringing mcdonald’s and coca-cola to the “wild east,” george cohon (right) and son craig are now focused on russian en-tertainment.

The economic crisis of 2008 forced China to look at ways to diversify its supply of raw mate-rials, from iron to coking coal, much of which it had imported from Australia and Brazil. Rus-sia was a natural alternative. The economic crisis made Russian companies aware of their need for foreign investment, as well. The K&S iron ore project at Bi-robidzhan, the capital of the Jew-ish Autonomous Region, is a good example of Chinese and Russian cooperation in action.

The Kimkhan mine, which is the first stage of the K&S proj-ect, is currently producing about 1.2 million tons of ore, which is now being exported to China. Russian iron ore producer I.R.C., which runs the K&S project, plans to export 10 million tons a year to China once a bridge is built to connect Birobidzhan with its largest market just across the Amur River. “This area is a huge-ly exciting one for companies like us,” said Jay Hambro, executive chairman of I.R.C., “and we would welcome new companies in the region, which would increase in-vestors’ comfort.”

The region’s key challenge, in common with other isolated min-ing projects from Africa to Mon-golia, is infrastructure, and China has the funds to solve the prob-lem. “China has never been in-terested in acquiring controlling

stakes in Russian companies,” said Krasnojenov. “What they want is to secure a steady supply of the raw materials they need and build the infrastructure to get it back to the home market.”

It’s not surprising then that fi-nancing for the K&S project was arranged by China’s I.C.B.C. bank and the China National Electri-cal Engineering Company (C.N.E.E.C.). The K&S mine is also providing jobs for Chinese citizens. “We use Chinese work-ers to develop the mine,” said Svetlana Kostromitinova, a min-ing analyst with Petropavlovsk, which owns a controlling stake in I.R.C. “It’s a win-win for ev-erybody.”

Enthusiasm for the Chinese presence is not universal; many locals are wary of the gradual penetration.

“The growth of China so close to our borders is really frighten-ing,” said Svetlana Ivanova, a sec-retary in Blagoveshchensk. “I know they want to invest, but many of us fear they will then want to control things here.”

Those looking at the bigger pic-ture, however, say that the cli-mate is generally receptive. “Chi-nese investment is quite welcome in this area,” said Krasnojenov. “All big projects in the Far East and Eastern Siberia require very significant infrastructure, and China’s role will be vital.”

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workers prepare to enter a mine in russia’s khabarovsk region, near the border with china.

global russia business calendar 14th semi-annual russian-american innovation technology week june 23–30,MayoR’s ReCeption RooM at philadelphia City hallRussian-American Innova-tion Technology Week (RANIT) brings together entrepreneurs, scientists, venture capital-ists and established corpora-tions within the American and Russian technology industries. The 2011 conference will be de-signed to highlight increased in-volvement by key Russian and American policy makers, includ-ing the Health and the Business Development Working Groups of the U.S.-Russia Bilateral Pres-idential Commission.

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Making Money by Going Privatehttp://rbth.ru/12990 money & markets

Russia’s leading companies are falling over them-selves to invest abroad, striking deals from Amer-

ica to Africa in the last year. Rus-sian companies have always been keen on investing overseas, but have usually held themselves to the countries of the former So-viet Union. Now, however, ner-vousness ahead of the upcoming elections combined with sound business practice has caused the

amount being invested to soar. Russian companies invested $19 billion abroad during the first three months of 2011. At the same time, only $9 billion of foreign direct investment (F.D.I.) came into Russia.

F.D.I. was up to $41.2 billion in 2010, but still down from 2008’s peak inflows of more than $80 billion. Analysts were addi-tionally disappointed, since this figure was less than half of the country’s outbound F.D.I. of $19.4 billion.

“The huge difference between the two figures suggests that Rus-sia has to focus on improving its investment climate,” said Nata-lia Orlova, chief economist with Alfa Bank. “It will be hard to at-tract more foreign investment while Russian business is active-ly investing abroad despite the huge need for domestic invest-ment.”

Russia has been plagued by capital flight. The country lost hundreds of billions of dollars to offshore havens in the 1990s, although much of that money returned once the economic boom started in 2000. Since Sep-tember 2008, however, the flow of capital has once again re-versed. In 2010, $35.5 billion left the country, $22.7 billion in the last quarter of the year. Those losses were followed by $21.3 bil-lion in the first quarter of 2011, despite the clearly improving macroeconomic situation.

Why is the money leaving? Clearly, domestic businessmen are nervous. In April, Deputy Economic Development Minis-ter Andrei Klepach put on a brave face, saying that the gov-ernment expects zero capital out-flow over the course of the year. But in a May speech, Presiden-tial economic advisor Arkardy Dvorkovich admitted that local investors are jumpy. The power in Russia is so vertical that any potential change at the top would

cause huge disruptions in how the country is run, and business doesn’t like uncertainty. Oli-garchs and mini-garchs alike are salting away a little something in other jurisdictions just in case everything blows up this win-ter.

But unlike the capital flight in the 1990s, which was simply cash put on deposit, this time Rus-sians are buying foreign compa-nies, and in the long run, this will actually be good for the economy.

The Kremlin is in the middle of a huge P.R. campaign to im-prove Russia’s image and attract more F.D.I., although Russia doesn’t need the money. The country has plenty of cash thanks to the high price of oil, but it desperately needs management skills and modern technology; F.D.I. comes with these valuable assets. It doesn’t actually matter if the investment is foreign firms investing into Russian projects or Russian companies buying foreign ones — at the end of the day, Russia still gets access to these precious resources, regard-less of where they are located.

moscow bLog

ben arisSpecial to RBtH

abroad or at Home, Russia Benefits from investment

any potential change at the top would cause huge disruptions, and business doesn’t like uncertainty.

Unlike the capital flight in the 1990s, this time Russians are buying foreign companies.

Ben Aris is the editor in chief of Business New Europe maga-zine.

stocks “Russia’s Google” debuts in highly successful i.p.o. on Nasdaq

By the time Yandex closed its list-ing on New York’s Nasdaq on May 24, the company had raised $1.3 billion by selling 52 million shares. The company delayed the sale by a day to raise the price and re-open the bid book after it was reported that the offer was over-subscribed by as much as 1,000 percent. “Russia’s Google” also in-creased its offering price from an initial range of $20–22 per share to $25.

The last-minute price hike was largely driven by an accelerating wave of global sentiment for In-ternet-sector stocks. Demand for exposure rose dramatically through May on the back of huge-ly successful I.P.O.s by Chinese social media site Renren and U.S. company LinkedIn, as well as Mi-crosoft’s $8.5 billion purchase of Skype early in the month. How-ever, appetite for Yandex was al-ready rampant according to re-ports, with investors believing that specific risks were already included in the price.

Announcing its I.P.O. in early May, Yandex went out of its way in its 2,000-page prospectus to highlight political risks and the

telling investors just how dangerous it is to work in your country might seem a funny way of selling shares, but that is what russia’s leading search engine did ahead of its highly successful i.p.o.

danger of a takeover bid from oligarchs close to the authori-ties. “High-profile businesses in Russia, such as ours, can be par-ticularly vulnerable to politi-cally motivated actions,” Yandex stated in the prospectus, add-ing that “other parties” may also perceive Yandex’s news service “as reflecting a political view-point or agenda, which could subject us to politically moti-vated actions.”

Yandex says it accounts for 64 percent of all search traffic in

Russia — compared with Google’s 22 percent — and is the largest Russian-based Internet company by revenue. That puts it at the top of a segment likely to devel-op swiftly as broadband is rolled out across the country and ad-vertising spending grows on the back of accelerating economic re-covery.

Even so, the price offered a sig-nificant discount compared to Yandex’s peers in other emerg-ing markets due to the risk of in-vesting in a company that many consider particularly ripe for takeover.

Under Russian law, all Inter-net service providers have to

allow the F.S.B., Russia’s main se-curity service, to attach a black box to their servers that can mon-itor e-mail traffic. In April, the F.S.B. raised the stakes, request-ing bans on Skype and Gmail, claiming they pose a serious se-curity threat.

President Dmitry Medvedev, known for his Web savvy, dis-missed the request, but the dis-cussion throws into relief the state’s uneasy relations with the information superhighway. Op-position figure Boris Nemtsov claimed in an interview that the state has forced most I.S.P.s to exclude opposition Web sites from their services.

Things took an ugly turn at the start of May, when Yandex an-nounced the F.S.B. had forced it to hand over details of users of Yandex.Dengi, its money trans-fer system. Specifically, the F.S.B. asked for information on finan-cial contributors to well-known blogger and anticorruption ac-tivist Alexei Navalny. Just over a week later, Russia’s Investigative Committee, the country’s top in-vestigative body, opened an in-vestigation into Navalny, claim-ing he used his position as an adviser to a regional governor to force a timber company into an unfavorable deal.

Still, investors shrugged off the risks. One fund manager, who asked for anonymity, said ahead of the listing: “Russia risk is al-ways there, so most are used to it. As long as the pricing and

strategy are right, then appetite should remain.”

Hungry for exposure to Rus-sia’s booming Internet sector, in-vestors have been waiting for Yan-dex to offer up its equity for close to three years. However, they still expect a discount for taking on the risk of working in Russia.

“The political risk for Yandex is already priced in via the more general Russian discount, which we factor at 37 percent to the [emerging market] aggregate,” said Otkritie Financial Company strategist Tom Mundy. “Look at the risk-free rates on Russian cor-porate debt versus sovereign; the spread between the two suggests strongly that the market is pric-ing ‘intangibles’ for Russian cor-porates.”

With those ‘intangibles’ priced in, investors were left in no doubt that Yandex’s story is a compel-ling one. Alexander Vengranovich, a media and I.T. analyst also at Otkritie Financial, agreed. “The investors we’ve been speaking with aren’t paying much atten-tion to the political risk story,” he said. “They’re more interested in the Yandex growth story.”

Yandex shares join Mail.ru — which in November recorded the only really impressive Russian I.P.O. result in the last three years — as the sole names offering ex-posure to Russia’s Internet sec-tor segment, which is expected to exhibit rapid and sustained growth.

Konstantin Chernyshev of Ura-

tim gosLing BUSiNeSS New eURope

yandex overcomes risk lsib suggested that Yandex is an even better bet than Mail.ru. “Un-like Mail.ru, Yandex offers a clear investment story,” he said. “Mail.ru benefited from being the first to offer exposure to the sector, and the backdoor it offered to Fa-cebook shares. It looks like it will lose both of those advantages in the near future.”

Russians, or over 40 percent of the population, use the Internet, mak-ing up the seventh-largest audience in the world.

is the size of Russia’s Internet ad-vertising market, which has experi-enced double-digit growth for the last decade.

of Russian Internet users prefer Yandex, making it one of few coun-tries with a local search engine more popular than Google.

60million

$1 billion

80%

in figures

the price offered a significant discount compared to Yandex’s peers in other emerging markets.

The president announced the project in February 2010, just before leaving on a tour through the United States. During that trip, Medvedev made a point of stopping in California’s Silicon Valley, to see what elements could be borrowed for his “in-nograd” — Russian slang for “City of Innovation.” Medvedev also enlisted big names from both Russia and the United States to help guide the project. The former chief executive of Intel, Craig Barrett, and Nobel laureate Roger Kornberg have been appointed the Skolkovo center’s co-chairmen; billionaire Viktor Vekselberg co-chairs a council responsible for oversee-ing the project; and Nobel lau-reate Zhores Alferov will be a co-chairman of the Skolkovo center’s scientific council.

At the moment, the Skolkovo center hosts companies work-ing in pharmacology, physics

and I.T., and is recruiting more businesses. The plan for Skolk-ovo envisions more than 40,000 people living on the center’s 914 acres, working for a variety or both Russian and international companies. Designers used the latest technology and ecologi-cal principles in creating the center. Innovative businesses in-terested in getting into the cen-ter apply online for space at Skolkovo, and may receive

grants from a special commis-sion to make their start-up eas-ier. While not all companies will receive funding, all Skolkovo residents are eligible for tax ex-emptions, including an exemp-tion from paying income tax.

Founders claim that projects de-veloped in Skolkovo have al-ready been used in resolving transportation issues, among other things; as an example, they cite a biotechnology project dealing with the safety of peo-ple commuting by public trans-portation.

Skolkovo will be the home of a scientific university as of 2014, but already boasts the Skolko-vo School of Management. The school, which offers a unique M.B.A. focusing on emerging markets, graduated its first class last year. The group included stu-dents from the United States and India as well as Russia.

To get the whole country ex-

Skolkovo, “City of Innovation,” Rises Outside Moscow

the campus of skolkovo school of management outside moscow

stanislav naumov wants to limit state involvement in skolkovo.

all Skolkovo residents are eligible for tax exemptions, including an exemption from paying income tax.

cited about the project, the Skolkovo Foundation has hired renowned director Timur Bek-mambetov produce an animat-ed series based on stories by the famous Soviet sci-fi writer Kir Bulychev. His protagonist, Alisa Selezneva, will live in modern Skolkovo and make scientific discoveries together with her parents, according to Stanislav Naumov.

Intel C.E.O. Barrett has said that linking business and re-search is Russia’s real chance at a technological leap forward. “It’s necessary to be confident in the righteousness of one’s cause,” Barrett said, “even if stable guar-antees are lacking.”

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yandex c.e.o. arkady Volozh (third from left) celebrates his company’s launch on the nas-daq exchange this may

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06 Personnel Mattershttp://rbth.ru/12856opinion

TaTarsTan > Moscow

When I saw the Ernst & Young report that concluded Tatarstan was a better place to

do business than Moscow, I had a feeling of justification. Actually, Anton Struchenevsky, an analyst at Troika Dialog, said it best: “It’s nice to have ‘proof of something that we could sense.’”

I have been to Moscow several times, but I have never done busi-ness there. For me, Moscow is very reminiscent of London, and both cities hold little interest to me from my perspective of an emerg-ing market investor. Beyond my own personal interests and re-quirements, the report details many aspects of Moscow that are simply unattractive for business owners. In fully formed centers like Moscow, you tend to get a lot of bloat. This translates into high-er prices, taxes and a general feel-

Jonathan Fianu

Special To RbTh

ing of not getting value. By con-trast, in emerging centers like the Republic of Tatarstan, everything is much leaner. This is mainly be-cause the local area can’t afford to be anything else. If the prices are too high, or the business pro-cess wildly complicated, people will simply establish their busi-nesses elsewhere.

I have been based in Chistopol, which is in the Republic of Ta-tarstan and an hour outside the regional capital Kazan, for the past two and a half years. Since I arrived, I have only seen posi-tive change. Surveys like the Ernst & Young report and a 2009 World Bank survey that showed similar results are very encouraging, as they validate my feelings and ex-periences. That said, there are still a lot of issues that appear when conducting business in Tatarstan. If I were filling out the survey, I think the focus of my complaints would be on staff and partners. The mindset is still immature in the Russian regions. Certainly

there is a burgeoning group of internationally minded, home-grown entrepreneurs, but there is still a lot of Soviet-era think-ing, as well. This mentality, com-bined with the fact that the con-sumer power is stronger in places like Moscow, may give po-tential investors pause when con-sidering the Republic of Tatar-stan as a place to do business. However, I feel that over time the mindset will change, and at the moment, places like Kazan are hungry for more goods and ser-vices while the market for these goods and services in Moscow is close to saturated.

Another positive factor is that the Tatarstan government is ex-ceptionally progressive. There is a genuine desire by the regional government to improve the busi-ness climate in the region and cre-ate foreign partnerships. One of the most recent examples of this was the Kazan Venture Fair, at which sessions touched upon re-lations between Russian and west-

Jonathan Fianu is the C.I.S. di-rector of Blue Sky Laboratories, a U.K.-based startup incubator.

darrellstanaford

The moScoW TimeS

moscow has historically absorbed the bulk of in-vestment and develop-ment in Russia — no

one was surprised to learn that more than 90 percent of domes-tic investment wound up in Mos-cow in 2010. But there are sev-eral signs that this trend is coming to an end. Moscow’s over-loaded infrastructure, new au-thorities with a different set of priorities, and exorbitant costs of doing business all are factors that are prompting businesses to ex-plore Russia beyond Moscow.

Due to a combination of mar-ket forces and prudent policies, by 2020 the Russian economy will be far more modern, expanding more evenly across the regions. The capital itself will become a far more livable city — and thus more competitive as a global fi-nancial center.

New York was once the domi-nant city for business in the Unit-ed States. But it became so crowd-ed and expensive that many industries left it for New Jersey or Los Angeles. In the 1990s, Los Angeles went through the same process. Today the U.S. economy is spread out across more than 20 major cities, many of them hubs for specific industries.

In Russia, the move beyond Moscow has already begun, led by the economy’s most innova-tive sector: Information technol-ogy (IT). At least 12 major IT com-panies have developed or relocated their research divisions to regional cities, including Ac-centure in Tver; Hewlett-Packard in St. Petersburg; Oracle in St. Petersburg, Novosibirsk, Tolyatti and Ryazan; and Intel in St. Pe-tersburg, Nizhny Novgorod and Novosibirsk.

The key factor is the ability to hire and retain workers who have

business Moves beyond Moscow

down in The MouTh

Tim Ash and his colleagues at the Royal Bank of Scot-land were in Moscow in March for a look-see. Rus-

sia is the “flavor of the quarter”: The economy is doing far better than expected and the budget def-icit could disappear completely this year, four years ahead of schedule, among other things. And it is one of the few places in the world taking in new money, with some even suggesting it could emerge as a possible safe haven in the face of instability in the Arab world and Japan’s woes.

But Ash says he was surprised to find the locals so pessimistic about their prospects. “In terms of overall impressions from the trip, we were actually taken aback by the generally downbeat views of locals on the economy. While accepting that high oil prices would provide a short-term boost to the economy, there was concern that this would likely just discour-age policymakers from address-ing deeper-seated structural weak-

nesses revealed through the crisis over the past three years,” Ash wrote in a note on the trip.

Ash’s comments on the pessi-mism among locals is poignant. I have often noticed this: Russians in general tend to be a lot more downbeat about the future of their country than the foreigners who live and work here.

I’m not sure exactly what the cause of this is. One factor is sure-ly war fatigue. Russians have lit-erally been battling to build a new country for two decades now, and it has been really hard work. What little progress was made in the 1990s was almost all destroyed in the ruble crisis of 1998, and most had to start again and re-build their businesses. But they did, and under Vladimir Putin, stability and an economic boom emerged. And in 2007, there was some real optimism about the fu-ture. But the 2008 economic cri-sis knocked everything down again.

If you ask me, Russians are sim-ply tired of struggling. The for-eigners love the dynamism of Rus-sia and the opportunity it presents, as it stands in sharp contrast to

the ossified social hierarchy of home. However, as one of my Rus-sian colleagues said to me: “You are already an adventurer simply because you are here, so this all suits you. And you have the op-tion of leaving anytime you want. Me, I have to put two kids through Russian schools. I rely on the Rus-sian medical system. And I will be dependent on the Russian pen-sion system. That is a totally dif-

ferent deal to yours.”The recent crisis has depressed

everyone, but I was surprised at how well most of my friends took this crisis compared to the black pall that fell over Russia in 1998. But that’s not to say they are happy.

Moreover, with Duma and pres-idential elections looming, there is more uncertainty on the near

horizon. The crisis undid Putin’s implicit promise — “don’t med-dle in politics and I will fix the economy” — and people are angry because they can see that the state is only pretending to listen to them. When profit margins were fat and wages soaring, it didn’t matter. But now they are think-ing more about politics and feel betrayed by the government.

Personally, I think this is a tem-porary thing and that everyone will cheer up after the elections are over and the economy is mov-ing again. After all, things are get-ting better in Russia pretty quick-ly, despite the big bumps in the road. And Russians don’t give up, regardless of how depressed they are. One of my favorite Winston Churchill quotes is from a trip he made to Moscow during World War II. As he was being driven to see Stalin, he saw a group of Russians standing in the snow eating ice cream. Said Churchill, “These people will never be defeated.”

Ben Aris is the editor in chief of Business New Europe maga-zine.

Russians in general tend to be a lot more downbeat about the future of their country than foreigners.

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ern investors; the role of govern-ment in developing the business sector; and the importance of im-proving business education in the Russian regions. The local author-ities also went out of their way to attract participants from outside Russia and to make the event as meaningful as possible for them.

As a venture capitalist in an emerging market, I found the event much more useful than the sessions I attended during Lon-don Business Week, which was a bigger and more prestigious event, but lacked the interest in my ven-tures that I found in Kazan. But what I found most inspiring about the Kazan event was seeing the passion for growth, change and success echoed by the regional government. For me, it was just further proof that when it comes to doing business Russia, Tatar-stan has a lot to offer.

tions. Once they’re in Moscow, however, the competitive nature of the market makes retaining them an expensive prospect.

It is much cheaper for a busi-ness to set up in a regional city, next door to the institute that pro-duces the specialists it needs—with no competitors nearby and cheap real estate.

How does it look from the em-ployee’s standpoint? The tradi-tional path to success for talent-ed young Russians is to move to the big city — Moscow — because there are no good jobs available at home.

But the employee’s housing

prospects significantly improve once industry moves to his home region. With 70 percent of a Mos-cow salary, an average college graduate can afford a mortgage in his hometown, where an apart-ment is a third of the price of one in Moscow. Kaluga, for example, has a market of more than 125,000 creditworthy buyers, including 25,000 employed at the region’s growing modern industrial parks.

Many businesses locate in Mos-cow to be near their clients. For the financial services, legal and consulting industries, most cli-ents will always be in Moscow.

For other industries, including oil, natural gas and pharmaceuticals, the government is either a part-ner or regulator, or both.

For most businesses, each func-tion has its own set of factors that determines its optimal location. Most manufacturing functions need to be near abundant, cost-effective labor, not near the cus-tomer — except where logistics costs represent a high proportion of total product cost. Some need to be near cheap raw materials. Almost all need access to cheap, reliable utilities.

Accounting and finance, cus-tomer service, repair, training and

Darrell Stanaford is managing director for CB Richard Ellis in Russia.

over the next 10 years we expect a drastic reduction in the influx of labor from the regions to moscow.

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many human resources functions do not have to be near their in-ternal or external clients. Thus, in 2008 Alfa Bank acquired a for-mer factory building in Uly-anovsk and redeveloped nearly 81,000 square feet for support functions. Citibank purchased 65,000 square feet in Ryazan.

Historically, the shift from over-grown cities to the regions has taken place when changing con-ditions create a better business and living environment there. Clearly, today the factors are there to push business out of Moscow, and now the government is real-izing that endless growth is bad for the city and Russia as a whole. Indeed, for Moscow to perform effectively as a modern financial hub, it will benefit from less de-mand on its infrastructure.

Regions that are delivering a transparent process free of cor-ruption are winning the invest-ment of businesses in Russia.

Kaluga has become the lead-ing example. Four industrial parks combined with the trans-parent, hands-on approach of the team led personally by Governor Anatoly Artamonov have attract-ed more than $5 billion in invest-ment and created a pipeline of more than 25,000 new jobs. New business has created demand for higher standards of infrastruc-ture, including housing, hotels, education and medical care. These are the things that improve the quality of life for talented professionals and their families — and will make them choose places such as Kaluga over Mos-cow.

Companies should not wait for Russia to modernize before they take the plunge into the regions. It’s their plunge that will accel-erate the modernization of Rus-sia.

Letters to the editorreactions to may 11 issueI was in Omsk, Siberia, from April 26 through May 2, attending the opening concerts at the newly renovated Omsk Cultural Center. The facility used to be a 1967 So-viet-era barn with appalling acoustics. Britain’s premier ac-oustician, Nicholas Edwards, was brought in by the Omsk Region’s Minister of Culture Vladimir Televnoy and Omsk Philharmon-ic Executive Director Sergey Ban-nikov to overhaul the existing fa-cility. They chose Edwards on the strength of his work at the hall in Kazan, which they heard in a tour of Russia’s major concert halls.Edwards is the acoustical design-er of the renowned Meyerson Symphony Center in Dallas and Birmingham’s [U.K.] Symphony Hall. He also did the acoustics for the recently renovated Royal Shakespeare Center in Stratford-upon-Avon. All those facilities, in addition to Edwards’s and his in-ternational firm Acoustic Dimen-sions’ other halls, have received excellent reviews.Edwards’s renovation in Omsk is a triumph. Valery Gergiev con-curred when he and the Mariin-sky Theatre Orchestra performed at the new hall on Apr. 30 with Denis Matsuev. In addition to the excellent musical options the city offers, we also visited the Sheb-alin College of Music, whose fac-ulty are educating and preparing young musicians for profession-al careers in the Russian Federa-tion and abroad. Many of their current students sang in the choir for Alexander Nevsky; many of their alumni play in the orches-tra and in other Russian ensem-bles of note.A highlight of our visit was an

audience with the governor of Omsk Region, Leonid Polezhaev, who is doing so much to pro-mote the Omsk Region’s rich cul-tural history. I wish that Amer-ica ’s governors were as committed to the arts as he is — and I have taken his important message back with me to the United States.The Omsk Philharmonic rehears-als and concerts that I attended were a highlight of my trip, my first to Russia, as was the rehears-al I heard of the splendid Omsk State Folk Choir, which includes dancers, singers and a small or-chestra of mostly Russian instru-ments. They were superb. You would do well to expand your cultural horizons outside Moscow and St Petersburg for your next supplement. Russia is a vast coun-try with a splendidly rich cultur-al history. That cultural life lives in Omsk — that came through to me and to my colleagues loud and clear. You will find tremendous interest in the West if you cele-brate this rich trove. I hope you will do so in your next supple-ment to The New York Times.

dr. Laurie shulmandallaS, TexaS

The overall effect of your first sup-plement was a very coherent statement that if you have money or skills, you better put Russia into your future.It also called attention to the bat-tle Russia also has with radical Islam and the patience in deal-ing with it. That is a point that Americans are not very aware of no matter that it is far worse in Russia than in the U.S.A.

Joe dartfaiRbankS, alaSka

the training and education that the business needs. Human re-source experts already know that the best hires often come from strong institutes in the regions. These schools turn out special-ists with skills to match their Moscow counterparts — but with initially lower salary expecta-

ben aris

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cultureButterfly Effect: Nabokov’s Gifts of Love for Salehttp://rbth.ru/12987

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stalking. I was curious to find out what people thought.

I was encouraged by the fact that approximately 120 people had crammed into a space that supposedly holds 85. I was en-couraged by the fact that the standing-room-only audience listened intently and often laughed when you might expect it. I was buoyed by the fact that, follow-ing the final reading, the place burst into — as the official Krem-lin chroniclers used to put it — an “intense, sustained ovation.” But maybe they were just being polite.

I sidled up to Varvara Nazaro-va, a fabulous young actress.

“Amazing,” she said with a big grin lighting up her face. “Aston-ishing how you Americans are just like us Russians! You’ve got that same, like, boldness and, uh, arrogance.”

I asked a stranger about the translations. What sounded

rough? Was there anything that sounded un-Russian in the texts?

“Excellent translations,” she said. “They all had a perfect flow as if they were written in Rus-sian. Very funny.”

I moved on to Yelena Kostyu-kovich. She is the literary direc-tor at the Saratov Youth The-ater.

“Those were fabulous plays,” she said, her eyes shining happi-ly. “It’s like they were Russian. Their sense of humor is exactly like ours. Very funny, very acer-bic on the surface, and devastat-ingly tragic underneath.”

There’s a Russian phrase that sort of goes, “Don’t leave behind good to go in search of good.” I’m a big fan of Russian wisdom. What else could I do then, but believe what people were tell-ing me?

powerful images is that of a street-side soda dispenser with a single communal glass. Pathetic, intimate and warm-hearted, the image does evoke some eerily sim-ple life.

“The book started out as an an-tidote to nostalgia,” Idov said in a phone interview. He found a re-cent tome by acclaimed Russian journalist Leonid Parfyonov, called “Our Era,” “omnivorous in its nostalgia.”

Idov said he worried he had gone too far in the other direc-tion. He decided to balance the hipper, ironic tone with personal essays.

The essays are written by the likes of artist Vitaly Komar and Russian Jewish émigré writer Gary Shteyngart. The result is a bit cha-otic — the book is at times a raw mix of essays, text, description and images — but packed with emo-tional power.

Lara Vapnyar’s recollection of her school uniform, which awk-wardly resembled a blocky ver-sion of a French maid costume, conjures an archetypal scene of an adolescent whose stirrings are stanched by a Soviet mother. The epic question: At what point does a school uniform fit? For a daugh-ter, when it fits her form. For a mother, when it hides her grow-ing daughter.

But the most visionary essay is written by Vitaly Komar, the pre-eminent founder of the Sots Art movement. Not only does he de-construct the hammer and sick-le, he recalls a limerick, what he calls an “infamous folk ditty of the 1960s.”

Here’s the hammer, here’s the sickle

Our nation’s proud symbolForge your steel,

cut your hayYou’ll be buggered

either way.

i have lived in Moscow for near-ly 23 years and I have heard this comment so many times my head hurts: “Russians

and Americans are identical”; “We Russians and you Ameri-cans are exactly alike.”

I don’t believe it for a min-ute. But I continue to hear it.

I most recently heard it at an evening of readings of short American plays in Russian translation. The event — which was called just that: “An Eve-ning of Short American Plays” — was organized by Georg Genoux of the Joseph Beuys Theater in Moscow. It was held down-stairs in the club at the Arte-FAQ café. I had a hand in it, too, as the plays came to Georg’s attention through me.

After a bit of vetting, the plays that I delivered to Georg were the following: Erik Ramsay’s “Traction,” K. Frithjof Peterson’s “Gun Metal Blue Bar,” John Walch’s “Aisle 17B,” George Brant’s “Clipped,” Samuel Brett Williams’ “Missed Connections” and David M. White’s “Enough.” Each is a dramatic sketch that takes roughly 10 minutes to read.

That’s when the surprises began. Yury Muravitsky, the di-rector to whom Georg entrust-ed the work on the readings, told me that he was knocked out by the plays. Very funny, very clear, he said.

Very clear? Very funny? Okay, the old geezer dying in “Enough” might be like old geezers dying in many places in the world, but the lunatics in “Traction” who appear to see religion in the no-tion of the tire gripping the road? The sadistic middle-aged farm-er snapping pigeons’ necks to keep the flock pure in “Gun Metal Blue Bar?”

I was taken aback. Even after living in Russia for 23 years I still never tell jokes in Russian. Never. Ever. And when I do, they fail. Period.

After the readings, I went

in his irreverent, quirky and loving book, “Made in Rus-sia: Unsung Icons of Soviet Design” (Rizzoli), editor Mi-

chael Idov brings in a team of heavyweight writers and artists to explore Soviet life, art and kitsch. Together, they reminisce and rediscover the hardscrabble, ineffable designs that helped to shape Soviet life. They chose 50 of the most evocative icons to riff on.

Recalling one of the Soviet Union’s brightest moments, when Sputnik-1 orbited the earth in 1957, Idov quotes Claire Booth Luce, who called the spi-der-like orb “an inter-continen-tal outer-space raspberry to a decade of American pretensions that the American way of life was a gilt-edged guarantee of our national superiority.”

Inevitably, Idov writes, Sput-nik “jump-started a number of design trends.” He also readily acknowledges that many Sovi-et designs were clumsy rip-offs of Western inventions. “Made in Russia” manages to focus on the most inspirational emblems, the best of a “crazed, Modernist pas-tiche,” Idov writes. “It jumbled together wartime know-how, space-age aesthetics, acciden-tal shabby chic, Slavic motif and warped dreams of the West.”

Most of the items, then — cho-sen by Idov and described by Bela Shayevich — are not feats of Soviet engineering. More in-triguing, they are the flotsam and jetsam of a dead society, from the ubiquitous 12-sided drinking glass to the loot-re-vealing fishnet shopping bag.

“Made in Russia” offers du-eling memories. One of the most

theater plus

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are Russians and americans Really the same?

For the St. Petersburg police, the night of Jun. 14, 2010, turned out to be far from quiet. Nine young people — dressed entirely in black, wearing masks and armed with canisters of white paint — stormed the Liteiny Bridge in the very heart of the Northern capital. The bridge is raised every night and lowered only at dawn. The raising of the bridge takes exactly 40 seconds. The stunt planned by the nine art-ists took only 23 seconds. As they fled into the night, they left be-hind on the raised bridge a 213-foot-tall painted phallus — staring straight into the windows of the St. Petersburg headquar-ters of the FSB.

Dubbed “The FSB’s Captive Member,” the act was planned and carried out by the activist art group Voina. If the group’s previ-ous stunts — which include group sex in the Zoology Museum (“Orgy”) and a “Feast” in the Mos-cow Metro — went unnoticed by some, this time the whole coun-try took notice. Created in 2007, Voina has an estimated 60 mem-bers or more, but its driving force is a triumvirate: the philosopher Oleg Vorotnikov, his physicist wife Natalia Sokol and Leonid Niko-laev, also known as Lyonya Chok-nuty (Crazy Lyonya), who was most recently employed by a com-pany that manufactures heating equipment.

underground provocative art group urges radical reform

ballet plitsetskaya and shchedrin return with mariinsky

the art group Voina (war), whose work includes a 213-foot phallus and overturned police cars, has received a state prize for its efforts.

maya plisetskaya, 85, will be on hand, with husband and composer rodion shchedrin, to open the lincoln center Festival next month.

“Voina is merely reflecting pop-ular opinion,” said Voina member and philologist Alexei Plutser-Sarno.

Voina’s most effective stunt to date was directed against insuf-ficient reforms inside the Minis-try of Internal Affairs. Voina turned the public discussion into a performance, which took place on Palace Square in St. Peters-burg. At night the square is pa-trolled by police, while patrol cars are stationed on all adjacent streets. Vorotnikov and Sokol’s two-year-old son rolled a ball under one of those patrol cars, then four activists turned the car over.

No one is saying just how many patrol cars were overturned by Voina that night, but the impor-tance of the act lies in quality, not quantity. The activist artists wanted to set an example and show how badly Russia’s police force needs radical reform.

This stunt, known as “The Pal-ace Coup,” landed Voina in court. The police did what some people said they should have done long ago: They pressed charges of van-dalism against Voina. Vorotnikov and Crazy Lyonya spent the next four months in prison. If British street art Banksy had not posted bail, they would be there still.

Then Voina won the Innovation state prize for contemporary art. Andrei Erofeyev, curator of the exhibition “Religion! Watch out!, who has also appeared in court to defend his artistic sensibilities, said: “Gigantic graffiti as a sym-bol of protest deserves a prize.”

The Voina activists boycotted the award ceremony since the

prize was given by one of their archenemies — the Ministry of Culture. For their part, bureau-crats from the ministry wrote an official letter saying they had nothing to do with the deci-sion.

According to heated debates on the Internet, not all Russian art-ists share Banksy and Erofeyev’s opinion of Voina.

Painter Ilya Glazunov, whose studio is located a stone’s throw from the Kremlin, said: “To paint a sexual organ on a bridge, what sort of art is that? That has ab-solutely nothing to do with art!”

Art historian Iosif Bakshtein, however, disagrees: “Not all of Voina’s stunts are synonymous. Many are intended to create a scandal, which for Russia today

is a rarity. Voina is sending soci-ety important impulses.”

Indeed, this is Voina’s aim. “We want to stir people up,” said Oleg Vorotnikov. “And we don’t need a government; that’s an obsolete form of social system.” His wife was still more specific. “We want to overthrow Putin’s regime,” Sokol said. Despite these loud po-litical declarations, both Vorot-nikov and Sokol still consider themselves only artists.

Activists from the pro-Krem-lin youth movement Young Rus-sia think otherwise. Group mem-bers protested Voina’s state prize outside the Ministery of Culture. In their opinion, Voina members are not artists but extremists. In the case of Voina, it seems espe-cially hard to determine where art ends and politics begin.

looking for trouble

pictured left-to-right: oleg Vorotnikov, natalya sokol, casper (child) and leonid nikolayev of the art group “Voina” (“war”).

maya plisetskaya celebrated her 80th birthday on stage in moscow.

anastasia gorokhoVaRussia Beyond the headlines

nora Fitzgeraldspecial to RBth

the art of “war”: stunts by VoinaAug. 24, 2007. FeAst.Voina held a wake for the poet Dmitry Aleksandrovich Prigov in the Moscow Metro after the dean of Moscow state university’s philoso-phy department forbade the joint Voina-Prigov stunt be held in a stu-dent dormitory. shortly after that, the poet died.Jul. 3, 2008. A CoP in VestMents.oleg Vorotnikov donned a police-man’s uniform over which he put a priest’s cassock; then he strolled into the upscale sedmoi Kontinent supermarket, picked up five of the most expensive items and walked out.

noV. 7, 2008. storMing the White housethe night before the anniversary of the 1917 russian revolution, a Voi-na brigade broke onto the grounds of the White house in Moscow (seat of the russian government) and, us-ing a laser, painted onto the façade a skull-and-crossbones 12 stories high.Jun. 14, 2010. the FsB’s CAPtiVe MeMBer. Voina painted a gargantuan phal-lus on the liteiny Bridge in st. Pe-tersburg.sept. 16, 2010. the Palace Coup.At night, near Palace square in st. Petersburg, Voina overturned sever-al police cars.

My Maya: A Life’s Dance, A Life’s Music

Plisetskaya was not allowed to dance in the United States until 1959, and then only a few times before the Soviet Union col-lapsed. Dance students like my-self followed Soviet dance ca-reers, and the occasional defection, with keen interest. But Plisetskaya and her beloved hus-band, Rodion Shchedrin, never came to stay.

We saw her mostly on grainy films.

When she came to Hartford, Conn., in the 1970s, my inexhaust-ible dance teacher was the first in line to buy tickets. It was pour-ing rain the night she performed for us. The moment I saw Plisets-kaya’s grand jeté, the jump split that is the proper noun of the bal-let vernacular, I gasped. My fel-low students and I were convinced she jet-propelled from a diving board offstage. She stayed at the highest point for a moment, de-fying both gravity and time.

It was then I realized there was no chance for me, with my round tummy and parallel legs. Yet a vi-

sion of her beauty fortified me. When I finally gave up dancing in my twenties and began to write about dance, she was the ultimate vision of perfection in my head. Her Carmen was too sensuous for the censors, her dying swan only more perfect in repetition, her Anna Karenina utterly original.

Maya Plisetskaya is arguably the most important ballerina of the 20th century, kept under the closest watch. Her six-decade ca-reer stands in contrast to her childhood. Her family was Jew-ish, well known as artists, danc-ers and actors. During the Great Terror, her father was arrested and killed, her mother sent to the gulag. Plisetskaya’s aunt had the vision and determination to con-tinue Maya’s daily ballet train-ing in wartime.

In 2006, I saw Plisetskaya dance a three-minute Bejart solo cre-ated for her 80th birthday. Her fans joyfully waited hours out-side the Kremlin Palace as pass-ports were checked.

The piece was called “Ave Maya.” Bejart had created a met-aphor for her: These arms can still make this body fly.

Five years later, I may get a glimpse of her again. Plisetskaya will be in New York next month with Shchedrin for the opening of the Mariinsky Ballet at the Lin-

coln Center Festival July 11–16. The Mariinsky will perform the signature Plisetakaya/Shchedrin ballets: “Anna Karenina”; “The Little Humpbacked Horse”; and “Carmen Suite.”

In her autobiography, she ex-plains why she did not defect. De-fection would have meant leav-ing her husband as well, as the K.G.B. did not allow them to trav-el together. Instead, she won her

battles with the censors and danced better than anyone else.

The Mariinsky Ballet will per-form July 11–16 at the Metro-politan Opera House. Valery Gergiev, the pre-eminent inter-preter of Shchedrin’s music, will conduct the ballets, with chore-ography by American Ballet Theater artist-in-residence Alex-ei Ratmansky.

the powerful yet unsung icons of soviet design

even after living in Russia for 23 years i still never tell jokes in Russian. never. ever. and when i do, they fail.

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Culinary Arts A new service complements Moscow’s restaurant scene: cooking with a professional chef

Taking lessons in gastronomy has become a popular trend among Russians, who are becoming more interested in good food.

After a sharp turn from mass-produced cafeteria food to expensive restaurants focused on price, Moscow’s dining scene today is focusing on quality.

Once a week, Yury Gusev, the co-owner of a large information tech-nology company, puts down his mobile phone for three hours so he can enjoy himself in a restau-rant. But he doesn’t sit down at a table; rather, he puts on an apron and moves into the kitch-en. Under the guidance of a chef, he learns the secrets of prepar-ing béchamel sauce, cooking bor-shch and chopping carrots.

“I’ve tried everything in my life, including the most extreme types of outdoor recreation,” Gusev said. “Over the last 10 years, my friends and I have traveled half the world and spent six � gures on entertain-ment. But it turns out there is only one thing that truly fascinates me — cooking. I never thought that I would pay money to chop on-ions or peel potatoes. But one hour in the kitchen for me is like a week of vacation. I shut myself off from everything, distract myself from daily life and feel happy.”

People like Gusev are becom-ing more and more common in Russia.

Back in the 1990s, dinner at an expensive restaurant or an abun-dance of exuberant gourmet food on the table was seen as a sym-bol of � nancial success and so-cial status. Today, Russians are interested in mastering the culi-nary trends themselves.

“Some � ve years ago, wealthy Russians dining out were guided by one desire — to spend as much as possible,” said Pierre Gagnaire, a famous French chef who owns restaurants bearing his name in Paris, London, Tokyo and Mos-cow. “Today, judging from the cli-ents at my Moscow restaurant, Russians still haven’t learned how to understand food, but they are actively interested in the combi-

public catering service. “They then prepare dinner from the gro-ceries they bought after return-ing to the hotel.”

Preparing desserts with a pas-try chef is another in-demand ser-vice among this restaurant’s reg-ular clients. There are always people who want to decorate and bake Tula gingerbread, a tradi-tional Russian delicacy.

Another fashionable trend is centering teambuilding events around food preparation. Lately, many companies have beeninterested in gastronomicrestaurants, even though onlyrecently sporting events such as paintball were primarily usedfor teambuilding,” said Vadim Palazhchenko, the chef at thedeluxe Lotte Hotel Moscow.“People are interested in a for-mat that brings the staff togeth-er and enables people to create new knowledge and experience while at the same time having dinner cooked by a famous chef at a fancy restaurant.”

The latest trend features a food market with premium groceries, a high level of service and a res-taurant where people can cook the food they purchased and re-ceive recommendations from a professional chef. One of the most interesting projects of this kind opened in Moscow in mid-December 2010. The seven-� oor Tsvetnoy Central Market was set up in the style of London’s Lib-erty and Harvey Nichols depart-ment stores. It hopes to become the go-to destination for Moscow foodies. Although all the facili-ties have not opened yet, eventu-ally the top three � oors will house the Farmer Bazaar farmer’s mar-ket, restaurants, a café and a bar, managed by the restaurant op-erator Ginza Project. The market offers beef raised in the Moscow suburbs, milk from Ryazan, cot-tage cheese from Lipetsk, honey from Altai and eggs from local villages as well as vegetables, fruits, seafood, spices and artisa-nal delicacies from around the world.

“All the food can be prepared and sampled here in the restau-rant. This is a free service,” said Boris Yaroslavtsev, the general di-rector of Farmer Bazaar. “We have ingredients for different culinary tastes, and the clients receive help in the restaurant from chefs who cook the most popular national cuisines — Italian, French, Japa-nese and, of course, Russian.”

Finding a New Home in the Kitchen

Guests of the Baltschug Restaurant inside Moscow’s Hotel Baltschug Kempinski can hire a chef to accompany them to a local food market.

DMITRY ALEXEEVSPECIAL TO RBTH

EMMA BURROWSSPECIAL TO RBTH

ally launched Italian cuisine courses. A year ago, we started children’s culinary courses. We are completely booked on the weekends.”

Some restaurants working in-side hotels have taken things a step further. Baltschug Restau-rant, inside the five-star Hotel Baltschug Kempinski in Moscow, recently introduced a new ser-vice: Guests can now visit the Dorogomilovsky market, one of the best food markets in Moscow, accompanied by a chef.

“The restaurant’s chef, Elmar Basziszta, teaches our guests how to distinguish the qualities of the original product and compile a menu depending on the existing product variety,” said Nico Gio-vanoli, the director of the hotel’s

nation of food and wines as well as the recipes, design and origin of certain foods.”

Interest in such food has prompted restaurateurs to expand the variety of ways people can develop their tastes and learn more about what they eat. These efforts have included tastings of food from different parts of the world, tours by foreign chefs, workshops on cooking national dishes and culinary courses.

“When I opened my � rst Ital-ian restaurant in Moscow 10 years ago, our clients weren’t familiar with basic Italian foods, such as Parmigiano-Reggiano, prosciutto or balsamic vinegar,” said restau-rateur Gayane Breiova. “There-fore, we held workshops at the La Scaletta osteria and eventu-

International Infl uence of Local CuisineFew would associate Russia with a strong gastronomic heritage or the culinary arts. At the same time, the world uses many traditions that draw on Russian cuisine, including the basic principle of serving food one dish at a time, which is referred to as service à la russe and replaced the popular service à la française, in which all dishes were brought to the table together.Russia played a considerable role in the global gastronomic arena pri-or to the Bolshevik revolution. The Soviet period was characterized by stagnation in agriculture, a shortage of food and lack of official interest

in cooking considered “bourgeois.” This time period largely erased many centuries of gastronomic tra-ditions.

One of the most noticeable ways in which Moscow is starting to feel like Europe’s biggest capital is in its rapidly changing restaurant scene. During the Soviet era, food was generally standardized and mass-produced for cafeterias in schools and office buildings, or home grown at the dacha. It was hard to get foreign products, and imitations were of poor quality; Ivan Shishkin, co-owner and chef at Delicatessen bar and restaurant in Moscow, said that Soviet coffee had a reputation for being almost

undrinkable, and that “burgers” were made with ground beef that had been dissolved in water.

The changing expectations of restaurants in Moscow may have started with the � rst McDonald’s. It had a line stretching down the street, and its success resulted in the appearance of other fast food chains. In the late 1990s, luxury restaurants began to appear, as New Russians and oligarchs need-ed a place to show off their suc-cess. Restaurants such as the pop-ular Café Pushkin and, later, Turandot (both from Russian res-tauranteur Andrei Delos) enticed the nouveaux riches with their elaborate 19th century-inspired decor and traditional French and Russian cuisines.

Although these restaurants were successful, Shishkin says the 1990s

and early 2000s were a time when there was “a lack of understand-ing about good food,” and the most important things were showing off and spending money. Today, all that has changed. Said Muscovite Ekaterina Drobnina, “Putting on all your jewelry and � ashing your money is considered to be very vul-gar.”

Now, Russians are more inter-ested in different cuisines and well-crafted meals. Restaurants such as Delicatessen cater to well-traveled Russians who know about food. According to Shishkin, these plac-es are informal and intimate, where customers come to relax and feel good. Delicatessen, he said “caught the wave” of new dining in which couples, families and businesspeo-ple all mingle together over food and drink. He believes that today’s customer is more discerning and is not prepared to pay for a bad experience. At Delicatessen the four owners work with the staff to serve customers. The food is tasty, but reasonably priced.

According to Ian Zilberkweit, Executive Chairman of Le Pain Quotidien/Khleb Nasushniy (Our Bread) bakery group in Russia, in-creased competition between com-panies has also improved the res-taurant culture in Moscow. He says that with more products and res-taurants available, Russians are

able to choose between establish-ments, which drives up quality as businesses compete for customers. Furthermore, he pointed out that establishments such as Le Pain Quotidien have actually bene� ted from the recession: Le Pain Quo-tidien has seen growth of more than 30 percent as Russians, rath-er than wasting their money on inexpensive restaurants, sought out high-quality products in order to treat themselves.

“We’ve also seen an increase in the number of businesspeople who come in to our cafes — they want good food, a casual place to hold a meeting and they want it to be

reasonably priced,” Zilberkweit said. In order to attract this new type of customer, establishments are seeking to improve quality. At the Le Pain Quotidien factory just outside of Moscow, production is centralized to maintain standards, and all the bread products are made by hand by chefs and bak-ers who have been trained using traditional artisan techniques. At Delicatessen, Shishkin says that he spent months developing the perfect kind of burger.

However, something that is dif-� cult to change is consistency and service. “This is the single most dif-� cult thing in Russia,” said Zil-

berkweit. Le Pain Quotidien in-terviews four people for every one position, but even then it is pos-sible to be served by a dour wait-er or to have to wait too long for service. The old adage “the cus-tomer is always right” is something that has yet to reach Moscow.

Shishkin says that, in this re-gard, Moscow is still behind West-ern Europe. “In the West, you can be fairly certain that wherever you go to eat, you will have good food and service. Here you can never be certain. It is like a lottery; just because somewhere is good twice, it doesn’t mean that it will be good the next time,” Shishkin said.

Moving from Cafeteria to the Sushi Bar

The Moscow branch of the restaurant Nobu, which is co-owned by Robert De Niro, openned in 2009.

In MoscowCAFÉ PUSHKIN CUISINE: RUSSIAN AVERAGE COST: $30-50WWW.CAFE-PUSHKIN.RU/EN

NOBUCUISINE: JAPANESEAVERAGE COST: $30-50WWW.NOBURESTAURANTS.RU

LE PAIN QUOTIDIEN CUISINE: BAKERYAVERAGE COST: $20-25WWW.LEPAINQUOTIDIEN.COM

DELICATESSENCUISINE: EUROPEANAVERAGE COST: $50-100WWW.NEWDELI.RU

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