News iN Brief

In thIs issue

Next week, Russia is planning to deploy four Glonass-M navigation satellites to add to its orbital group of 23 operating units. This will enable it to provide global cover-age for the first time since 1995. Glonass is Russia’s version of the US Global Position-ing System (GPS) and the planned Galileo positioning system of the EU. It is devel-oped from a radio-based set-up built in the days of the Soviet Union. To provide global coverage, it needs 24 func-tioning satellites and two or three in re-serve. The use of hybrid signal receivers si-multaneously from both navigation systems helps reduce the time and improve the qual-ity of global positioning, according to re-ports by news agency RIA Novosti.Meanwhile, Apple’s new iPhone 4S, which went on sale in mid-October, is the first glo-bally sold smartphone to support the Rus-sian Glonass navigation system along with GPS, says the company’s phone manual.

New satnav system to go global

OpiNiON

putin & MedvedevHow will the cards fall under the ‘New Deal’?

A survey by hotel.info has revealed that Moscow’s hotels are, on average, the second most expensive in Europe. Moscow was placed between Oslo and Copenhagen in the survey, with average prices calculated at 6,051 roubles (£124) per night. But the recent surge in hotel construction should provide more lower-priced options for tour-ists and business visitors. This year, three new hotels have opened their doors, and another four will follow in the forthcom-ing months. In 2012, 14 new hotels are due to open in Moscow’s city centre. According to long-term plans announced by the Mos-cow Tourism Committee, by 2020 Moscow should boast 535 hotels, offering a capac-ity for 150,000 visitors at a time.

Prices to come down as new hotels go up

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politicsBalancing the books: how will Russia fare in the post-Kudrin era?p.02

BusinessFarewell to arms: Russia says goodbye to the Kalashnikovp.03

architectureStalin’s ‘Sisters’: Moscow still loves its postwar skyscrapersp.07

Tuesday, October 25, 2011

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Tax Huge rises in duty will bring billions into government coffers, but will hit drinkers and smokers hard

Russia – a country that al-ready has an aggressive an-ti-alcohol policy – may soon see prices for vodka and cig-arettes undergo a massive rise. Deputy Finance Minis-ter Sergei Shatalov an-nounced last week that the minimum price in the shops for half a litre of vodka will rise from 98 to 180 roubles (£3.65) in 2014, while the cheapest cigarettes will more than double in price to 40 roubles (81p) a pack. This increase was planned by Alexei Kudrin – who was fi-nance minister until last month – along with Presi-dent Dmitry Medvedev, after findings revealed that high excise taxes do help reduce alcohol consumption. The findings coincided with both the government’s and the Kremlin’s ambitions to tack-le problems associated with alcohol, as well as the Fi-nance Ministry’s urgent need to reduce the widening budg-et deficit.Addressing the State Duma, Mr Shatalov reiterated that excises are in for annual in-dexation by 40 to 45pc over-the next three years. The in-dexation of excises on strong

Nation prepares for double vodka

Thirst principles: measures in place include a ban on the sale at night of strong drinks – such as vodka

star wars revisited: strategic Defence of earth echoes reagan’s sDi plan

Tough anti-alcohol tax measures designed to tackle problem drinking will result in vodka costing almost twice as much by 2014.

igOr VYuzHNYRussia now

alcoholic drinks will gener-ate an extra 135bn roubles (£2.7bn) of revenue in 2012, and as much as 250bn rou-bles (£5bn) by 2014. Excise duties on beer and wine are also due for a sig-nificant rise, which will bring in tens of billions of roubles in extra budget revenue. The Finance Ministry expects a rise in tobacco taxes to yield an additional 429bn roubles (£8.7bn) by 2014.The struggle against binge drinking was first launched by then USSR General Sec-retary Mikhail Gorbachev back in 1985, when he sim-ply closed down most win-eries, alcohol factories and shops selling alcoholic drinks. Within three years, he had successfully cut alcohol con-sumption by approximately 27pc and reduced alcohol-related deaths by 12pc. More recent anti-alcohol measures have been less drastic. They include a ban on selling strong alcoholic drinks (over 15pc proof) at night, and a ban on taking alcohol on public transport. In a further measure aimed at decreasing consumption among young people, a ban on beer advertising will be imposed in 2013, when sell-ing beer on street stalls will also become illegal.Alcohol and tobacco produc-ers argue that the high taxes will not cut alcohol con-sumption. They predict that,

as Russia’s Customs Union partners Kazakhstan and Be-larus have lower alcohol and tobacco taxes, the excise rises will encourage smuggling and benefit the black mar-ket, which is already said to account for around 30pc of alcohol and tobacco sales.

But the government is deter-mined to tackle the black market, too. In February, it imposed a ban on relocating alcohol without notice and introduced transportation li-censing to “eliminate any possible loopholes for com-panies producing and selling

Having failed to extract a legal guarantee from the US that its Europe-based ABM (anti-ballistic missile) facili-ties are not directed against Russian nuclear forces, Rus-sia is hoping to overcome its fears with a bold new plan.The newspaper Kommersant has learnt that a missile ini-tiative – code-named Strate-gic Defence of Earth,

Technology anti-ballistic missiles could be used to defend the Earth against deadly incursions from outer space

Medvedev ‘interested’ in new strategic shielda new aBM proposal promises protection from asteroid strikes as well as missiles, according to russia’s ambassador to Nato.

aLexaNDer gaBuYeVKommERsanT

counterfeit alcohol products or using shadow companies to sell fake products”. Experts hailed the proposal as a means to improve transpar-ency and reduce the illegal share of the market. And the measures haven’t stopped there: under the pre-

text of protecting the nation’s health, a bill has been sub-mitted to the State Duma on introducing a state monop-oly on the production and sale of ethanol, proposing to restrict its production only to plants with state-run stakes of at least 51pc.

recalling the Reagan-era Strategic Defence Initiative – is being discussed in Mos-cow. The project proposes a joint system involving the US and Nato and is designed to protect the whole planet against not only missiles, but also asteroids, debris from comets and other threats from outer space.According to Kommersant sources, the idea was put for-ward by Dmitry Rogozin. President Medvedev’s special representative on anti-missile defence policy, Mr Rogozin is also Russia’s permanent am-bassador to Nato. The proposals are said to be

reminiscent of the American Star Wars project, in that the system would monitor the space around the Earth and have striking capabilities to destroy any threatening ob-jects as they approach.“Currently, the US missile defence system is aimed ex-clusively at protecting the country against missiles launched from somewhere in the Middle East,” said a dip-lomat close to the project. “The new plan involves bring-ing together air, missile and space defence.”A Kommersant source added: “Missile defence is currently being promoted by Washing-

ton as a configuration just to solve the global problem of shielding America and its allies against missile threats. Our concept offers them an even more global challenge: to save the world. And it won’t be alone, but together with us. “There is already an arche-type for this in American culture. Remember the movie Armageddon, where Bruce Willis saves the Earth along with the Russian [cosmonaut] Lev Andropov, who hangs around the universe in a trapper hat with a wrench

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02 most readRussia now www.rbth.rusection sponsored by rossiyskaya gazeta, russia distributed with the daily telegraph tuesday_october 25_2011

Duma elections: knowns and unknownshttp://rbth.ru/13522politics & society

presidency The leaders’ proposed role-reversal continues to fuel much speculation

The beginning of the parlia-mentary election campaign has been marked by a number of resounding statements from the country’s leading politicians, stirring up Rus-sia’s political scene. The announcement by Pres-ident Dmitry Medvedev at the Congress of the United Russia party that he was nominating Prime Minister Vladimir Putin to be presi-dent was one such statement. This was closely followed by Finance Minister Alexei Kudrin’s resignation.Subsequent in-depth inter-views given by the president and prime minister have attracted the close attention of the world’s media; politi-cal analysts are now guess-ing at what is behind the tan-dem’s recent decisions and trying to predict how Rus-sia’s political system will change as a result. The Putin-Medvedev reshuf-fle immediately gave rise to speculation that the job swap had been agreed upon four years ago, on the eve of the previous presidential election. Indeed, Vladimir Putin seemd to confirm this in his interview to three na-tional TV channels. However, Igor Yurgens, chair-man of the management board at the Institute for Contemporary Development (where Mr Medvedev chairs the board of trustees), thinks it unlikely that an agreement was made in 2007. In an in-terview in Kommersant, Mr Yurgens said the ruling tandem had to agree to the swap under the pressure of various circumstances, not-ing that Mr Medvedev only recently made it clear he was ready to run for anoth-er term in office. The president went on air to explain the rationale behind his decision, maintaining that it was because Mr Putin was the most powerful poli-tician in the country with a rating slightly higher than his own.According to Igor Bunin,

president of the Centre for Political Technologies, this makes it clear to everyone that Mr Putin is behind the wheel, and that it was up to the PM to decide whether Mr Medvedev should seek an-other term or not. “Vladimir Putin has many reasons to run for presidency, but one of the main reasons I think is his belief that the system he had created requires po-litical stability to survive. Ap-parently, Putin was not sure whether Medvedev could maintain it, with its modern-isation and political reforms,” he said. Vladimir Putin’s bid for a third presidential term was met with mixed reactions from global politicians. Many foreign media organisations reported concerns that Rus-sia could see yet another pe-riod of political stagnation – typical of the Soviet Union under Brezhnev. Mr Putin, however, rushed to allay these fears, and rejected the com-parison as absurd, saying that none of the postwar Soviet leaders had worked as hard as him or Medvedev. According to political ana-lyst Dmitry Orlov, it is clear

that Mr Putin is returning as the “supporter of moderni-sation and development, not stagnation”. Mr Orlov told news agency RIA Novosti: “A new Putin is returning to Russian politics. This Putin is the supporter of modern-isation, positive change, and a new approach to creating a new interface for commu-nication between the author-ities and society.”Mr Putin’s article in Izvestia, in which he suggests creat-ing the Eurasian Common Economic Space based on the Customs Union of Rus-sia, Belarus and Kazakhstan, has also provoked heated de-bate. Many observers sound-ed the alarm bell, seeing this as something akin to the recreation of the Soviet Union. Mr Putin, however, dismissed those concerns, stating that Russia had no imperial ambitions in post-Soviet regions. According to Vladimir Zha-rikhin, deputy director of the CIS Institute, the idea of creating the Eurasian Union is fully compatible with the emerging geoeconomic situ-ation. “The post-Soviet na-tions have realised that

putin takes driver’s seat as tandem rolls on

Face value: mr medvedev is seen as a democrat and a liberal, and mr putin as a conservative supporter of strong government

analysts are studying the motivations behind the rulers’ proposed reshuffle – and trying to predict the potential outcomes.

alexei ilyinspecial To russia now

It was during the blighted year of 1994 (when the budg-et for all of Russia was com-mensurate to that of New York City alone) that the State Automated System (SAS) Vybory (“Elections”) software was developed in Russia. It was tested a year later. Prior to its introduc-tion, electoral rolls were printed on typewriters and ballot papers were hand-counted (in 1993, for exam-ple, it took 12 days to count the votes). The speedy development and launch of the system was helped, of course, by Soviet technological innovations. But world-leading IT com-

Russia’s widely respected fi-nance minister, Alexei Kudrin, decided to quit just days after Prime Minister Vladimir Putin and President Dmitry Medvedev announced their intention to swap jobs. Citing a string of disagree-ments with Mr Medvedev, Mr Kudrin said: “I do not see my-self in a new government. The matter is not only that no one has offered me the job. I feel that the disagreements I have will not allow me to join this government.” Alexei Kudrin is credited with stabilising the Russian economy and creating the foundation for the strong economic growth of the last decade. The departure of “Mr Prudence”, as he has been dubbed, raises two questions: will he come back to govern-ment at some point? And does his departure mean that there will be a dramatic change in the cautious fiscal policy he came to personify?“I don’t think this is the last we have seen of Kudrin,” says Nikolai Petrov, research fel-low at the Moscow Carnegie Centre. “I wouldn’t be sur-prised to see him back as prime minister next year.”It is widely believed that, after 11 years in the job, Mr Kudrin wanted to step down – but would have stayed on if offered the position of prime minister. His disagree-ments with Mr Medvedev over plans for a dramatic in-crease in spending are well known. “It is clear that Kudrin chose to leave be-cause he did not want to be a prime minister-in-waiting for the next decade,” says Lilit Gevorgyan, a political analyst with IHS Global In-sight. “But he also left be-cause he was in disagreement with Medvedev over plans to spend $65bn on the military over the next three years.”The fear that many investors and businessmen have ex-pressed following Mr Kudrin’s departure is that his prudent economic policies will be abandoned. “On the policy side, in a sense Kudrin has not done as well as he used to [lately] because the pres-sure to spend has grown in recent years,” says Sergei Gu-riev, the Dean of Russia’s New Economic School, point-ing out that the price of oil – a necessity for the federal

technology Ballot papers to be scanned electronically

kudrin Former finance minister is a tough act to follow

electronic voting systems are now part and parcel of russia’s elections, while british votes continue to be cast and counted manually.

he is credited for policies that protected russia from the worst of the financial crisis. but will they remain in place without alexei kudrin?

panies HP, Oracle and Cisco Systems also contributed. “With the creation of the SAS Elections software, we became pioneers. And to this day, not a single country in the world has a system like ours,” said a very proud Mikhail Popov, head of the Federal Centre of Informa-tion Technologies under the Central Election Commission of the Russian Federation. Mr Popov may be somewhat exaggerating the importance of his creation. But there is one fact that’s hard to dis-pute: SAS has served more than 20,000 election cam-paigns at various levels without significant techno-logical failures.In 2009, President Dmitry Medvedev proposed that the system be upgraded to en-hance the transparency of the electoral process and to strengthen public confidence. Last year, a relevant state

budget to break even – has risen from $23 [per barrel] in 2007 to $118 today.With western Europe teeter-ing on the edge of another crisis, the Russian economy is already feeling the pain caused by growing uncertain-ty. In the first week of Octo-ber, the Russian stock mar-ket sold off heavily, returning valuation to the same levels as 2008, and capital flight has picked up dramatically.However, most Moscow-based analysts are confident that Mr Kudrin’s successful

policies will not be undone. Under one of his plans, the Russian oil industry pays taxes equal to around 90pc of crude export revenues over $28 per barrel, and these pro-ceeds are placed in a stabi-lisation fund. It was this fund that was used to cushion Russia from the worst of the financial carnage in 2008. At the same time, Mr Kudrin used the windfall oil receipts to repay almost all of Rus-sia’s national debt. As a re-sult, the debt-to-GDP ratio fell from 160pc in 2000 to about 10pc today.“Kudrin’s views weren’t pop-ular. But then-president Putin backed him to the hilt,” says Liam Halligan, chief

programme was launched specifically to introduce elec-tronic vote counting, estab-lish a secure network for data transfer and storage, and construct infrastructure for remote voting via mobile phone for those who cannot attend polling stations. This is particularly important in

economist with Prosperity Capital Management.“Kudrin’s actions provided the stable macroeconomic platform that Russia so des-perately needed. His policies will be broadly maintained because they have been suc-cessful and, in the aftermath of the 2008 crisis, were ac-knowledged as successful – even by many of his former oil-lobby detractors.”Mr Putin highlighted the closeness of his relationship with his former finance min-ister during a speech at the annual VTB Capital invest-ment conference earlier this month. He said that Mr Kudrin would remain part of the team – but didn’t spec-ify a role. “He is, no doubt, one of the best specialists, not only in Russia, but also in the world,” said Mr Putin. “He is a friend of ours and a per-sonal friend of mine.”The Kudrin-Medvedev row has highlighted a sea change in Russian politics. Under Boris Yeltsin, Russian poli-tics was all about who held raw power; but, increasingly, under Mr Putin, political bat-tles are fought over policy.According to Mr Halligan, the spat demonstrates that “Russia’s nascent democra-cy, while still very much a work in progress and far from perfect, is already ca-pable of generating more meaningful public debate on fiscal policy in the run-up to crucial elections than many of the much older democra-cies in the western world.”

Hi-tech polls get vote of confidence

What next for Mr Prudence?

polls apart: the sas system is unique to russia

mr kudrin resigned after a fall-out with the president

alexei morozovspecial To russia now

ben arisBusiness new europe

On election day, citizens of the Russian Federation living in Great Britain can vote at any of these three polling stations:

Embassy of the russian Federation 6/7 Kensington Palace Gardens, London W8 4QP

trade Delegation of the russian Federation 32-33 Highgate West Hill, London N6 6NL

Consulate General in Edinburgh 58 Melville Street, Edinburgh EH3 7HF

The polling stations will be open from 8am till 8pm GMT.

Are there going to be any innovations in the upcoming elections in russia?Yes. Nearly 6,000 polling stations will be fitted with new automatic ballot- counting equipment. There will also be one thousand electronic voting devices that don’t require a paper ballot sheet. Voters’ selections will still remain secret, of course.

how many voters are there in russia and abroad? The electronic register contains 110 million voters, of whom 1,813,000 are registered with consulates abroad. Unfortunately, our citizens abroad are not very active voters: in the elections to the State Duma in 2007, only 304,000 out of the 1.7 million Russians registered with the consulates abroad actually voted. This is because of difficulties getting information to them, and the fact that Russians abroad live in many different places.

Can international observers

Questions & answers

Vladimir churov

globalisation is, in fact, tak-ing the shape of large eco-nomic clusters,” he said, going on to explain that Mr Putin’s initiative is an important part of his election campaign. “He has begun to outline the ex-ternal perimeter of Russia’s strategy for the next few years.” The Russian media have cre-ated a distinct image for each of the ruling tandem mem-bers. According to public.ru,

the online library of Russian media, Mr Medvedev is large-ly seen as a democrat, liber-al and patriot, whereas Putin is thought of as an experi-enced politician, a conserva-tive and supporter of a strong government. Moreover, many experts predict that the idea of a tandem may soon lose its appeal, claiming that Mr Putin will simply concentrate most of the power in his own hands – again.

and a bottle of vodka.” One of the key elements of the Russian proposal, ac-cording to Kommersant’s sources, is to put the new space defence system under the control of the United Nations. If adopted, the sys-

tem would certainly resolve Moscow’s concerns about the Euro-ABM system. But experts believe that Russia’s new venture has little chance of changing the course of negotiations with Washington over missile de-fence. “This approach has the

Plan to save the Earth with missilescontinued From page 1

a country the size of Russia, where in some regions the closest inhabited locations might be hundreds of miles apart.Many polling stations are now equipped with webcams. In theory, voters can watch the counting of votes with-out leaving their computers. But the effectiveness of this measure is limited by inter-net penetration rates: accord-ing to Yandex, Russia’s most popular search engine, just 40pc of the population aged 18 or older (that is, those el-igible to vote) has access to the web.One of the major technical innovations that will be in operation for the December State Duma (the lower house of the Russian Parliament) elections is an optical-scan voting system. All you have to do is bring your ballot to the scanner for the Russia-wide data network to record

all the information from it. This, of course, increases processing speed but, more importantly, it also helps pre-vent fraud at polling stations. In previous elections, “ballot stuffing” has been observed, but not a single fraud case has ever reached the courts. Now, if violations occur, there is documentary evidence to prove it. In Britain, following the chaos last year when long queues outside certain poll-ing stations left some people unable to vote, there have been calls to introduce elec-tronic voting systems. How-ever, the British Electoral Commission has expressed concerns about the security of the systems, and other con-cerns have been raised about the cost of them. So, for the time being at least, British votes will con-tinue to be cast and counted manually.

right to exist. But it does not affect the other ABMs Amer-ica is currently building in Europe,” Fyodor Lukyanov, editor-in-chief of the journal Russia in Global Affairs, told Kommersant. According to the newspaper, the concept has been present-ed to President Dmitry

Medvedev. After reading the document, the president is said to have written the word “interesting” on it. He has in-structed Dmitry Rogozin and foreign policy presidential aide Sergei Prikhodko to re-fine the proposals. Mr Prikhodko was unavail-able for comment, while

Dmitry Rogozin declined to speak to Kommersant.Mr Medvedev’s interest in the initiative comes as no surprise to one expert, who claims that “Dmitry Medvedev likes dif-ferent innovations. The bold-er and more creative the idea, the better chances it has of pleasing the president.”

be present at polling stations?International observers have the right to be present at elec-tion commissions of all levels, including precinct commis-sions, on polling day, on the days of early elections, at the count and at recounts. They can watch everything that happens at the polling stations. Not all countries are so open. When we asked per-mission to do the same in Fin-land, our request was turned down and there are many re-strictions in some US states.

Find more information about the elections at www.rbth.ru/elections

elections

Most analysts are confident that Kudrin’s successful policies will not be undone

The leaders’ plan to swap roles has not affected their popularity. The latest Levada Centre poll shows that 68pc and 62pc of Rus-sians approve of Mr Putin and Mr Medvedev’s work respectively.

Tandem decision on top jobthe polls

head oF elecTion coMMission

DECEmbEr 4, 2011elections For the russian state duma

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03most read Getting the Congressional Russian Caucus off the groundhttp://rbth.ru/13599 Politics & societyRussia now www.rbth.ru

section sPonsored by rossiyskaya gazeta, russia distributed with the daily telegraPh tuesday_october 25_2011

More than 20 years have passed since the end of the Cold War, when

Moscow and Washington often negotiated directly with each other. Whenever they failed to agree, the UN was brought in – but back then, that was not much help either. The world has moved on. These days, the UN is a central structure for inter-national relations and mul-tilateral co-operation on an equal-rights basis. It possesses a unique legiti-macy and the power to re-spond appropriately to to-day’s multitude of risks, challenges and threats. However, just like any other state authority, the UN can only be effective in a cer-tain legal environment – which is why the suprem-acy of law in international relations is so important.Unfortunately, in recent years, the international community has had a bit-ter experience of disregard for the law and the UN’s authority. Take, for instance, the bombings of Belgrade in 1999. The UN Security Council was not even asked to decide on that matter. The OSCE (Organisation for Security and Co-oper-ation in Europe) was also ignored, even though the Helsinki Final Act stipu-lates non-use of force against its members.In 2003, on the basis of an UNSCOM (United Nations Special Commission) and IAEA (International Atom-ic Energy Agency) report, the UN Security Council did not approve the use of force against Iraq. That did not stop the war from being unleashed. Fast forward eight years, and Iraq still is not a quiet place.The Middle East is now the focus of attention. The in-ternational community sup-ports the aspirations of its people to renew their coun-tries and embark on a path of independent, democrat-ic development. Any exter-nal support should be based on respect for internation-al law and should contrib-ute to the search for polit-ical solutions. Internal conflicts should be resolved peacefully via negotiations with all political forces, communities and ethnic groups involved.That said, implementation of the UN Security Coun-cil’s resolutions on Libya by Nato members and some UN Security Council mem-bers betrayed a disregard for the principle of suprem-acy of law. In fact, nobody has breached a Security Council resolution so fla-grantly before.The consensually adopted Resolution 1970 put an em-bargo on the arms trade with Libya. Yet weapons were still supplied to the rebels by some European countries and Arab states. The press reported on in-structors and special forc-es being used – this has be-

oPinion

alexanderyakovenko

Special to Rn

Bending the rules is not the way to resolve conflict

come an “open secret”.Resolution 1973 established a no-fly zone in Libya’s air-space, to prevent Muammar Gaddafi’s air force from at-tacking peaceful demonstra-tors and citizens. Russia, China, Brazil, India and Ger-many abstained at the vot-ing stage because its legal language was unsound. These concerns were well founded, as the coalition’s air force provided military support for the rebels. This undermined trust among the permanent members of the Security Council – which won’t be easy to restore.The blurred nature and am-biguity of UN Security Coun-cil resolutions are extremely dangerous, as are any dou-ble standards dictated by po-litical considerations of cer-tain states – something we see in particular in Yemen and Syria. On the one hand, members of the internation-al community are totally jus-tified in striving to find a compromise between the au-thorities and their opposi-tion; while on the other, some influential countries are in-sistently provoking the op-position to boycott national dialogue, fomenting confron-tation, and refusing to dis-cuss what are admittedly late, but still fairly real, reforms.That is why the recent vot-ing results on the UN Secu-

rity Council resolution on Syria were to be expected. A Council resolution should be comprehensive and free from any bias. It should also en-sure no external military in-terference in the conflict. Ac-cording to President Dmitry Medvedev, “Russia will op-pose any attempts to legiti-mise any sort of unilateral sanctions aimed at replacing political regimes via the Se-curity Council.” This is not the purpose for which the UN was created; it is the peoples themselves who should de-termine their own fate. The international community should help this process, rather than influence it uni-laterally or attempt to “man-age” it from outside.Nothing compares to a civil war in terms of humanitar-ian and economic conse-quences. While we do not yet know what the processes in the Middle East will entail, one thing is for sure: the way a conflict is resolved deter-mines its outcome for a dec-ade to come. We have seen this in Iraq and in Afghani-stan, where the Soviet Union got bogged down for 10 long years, exhausting its own economic potential along the way. The “Arab Spring” is remind-ing us that the supremacy of law in international relations is essential.

Alexander Yakovenko is Ambassador of the Russian Federation to the United Kingdom.

one thing is for sure: the way a conflict is resolved determines its outcome for a decade to come

NEXT ISSUE

The leaders of Russia, the EU and the US have reacted neg-atively to the prison sentence handed to the former Ukrain-ian prime minister, Yulia Ty-moshenko, a fortnight ago, sus-pecting there were non- legal motives behind it. A court in Kiev found Yulia Tymoshenko, aka “Lady Yu” and “the Gas Princess”, guilty of overstepping her author-ity as Ukraine’s then prime minister in 2009 by signing gas supply contracts with Moscow at prices said to be inflated. The court sentenced Mrs Tymoshenko to seven years in prison, banned her from holding public office for three years, and fined her 1.5bn hryvnia (£119m), pay-able to the Ukranian energy company Naftogaz.Russian Foreign Minister Ser-gei Lavrov responded to the verdict, saying it was highly politicised. “We cannot accept that a legitimate contract that remains in force and which has never been legally chal-lenged may be cause for a court ruling like today’s,” said Russia’s top diplomat. An of-ficial statement from the Rus-sian Foreign Ministry said that Yulia Tymoshenko’s con-viction carries “obvious anti-Russian overtones”.Prime Minister Vladimir Putin, who was the key ne-gotiator in the 2009 discus-sions with Yulia Tymoshenko

ukraine Sentencing of former prime minister over Russian gas contracts is ‘politically motivated’, says US

on the terms for gas supply and transit, said: “It is dan-gerous and counterproductive to cast the entire package of agreements into doubt.” He added that he didn’t under-stand why she was sentenced to seven years: “Tymoshenko did not sign anything. The gas contracts between Russia and Ukraine were signed in Jan-uary 2009 at the level of eco-nomic entities, by Gazprom and NJSC Naftogaz of Ukraine, in full accordance with the laws of Russia, Ukraine, and international regulations.”

While Yulia Tymoshenko’s de-fence cited similar arguments, Judge Rodion Kireyev found them unconvincing. It had been proven, he said, that the then prime minister had been personally responsible for ap-proving the gas supply con-tracts with Russia that inflict-ed damage on Ukraine.As a consequence of the ver-dict, the Russian natural gas contracts signed in 2009 have been effectively declared ille-gal in a court of law. Kiev seems to be indicating that, because the contracts are il-legal, they should be can-celled. But Moscow has said it won’t budge on the gas con-tracts, so the conflict is un-likely to end peacefully.Europe and the US have both expressed concerns about the

legal and humanitarian im-plications of the case. Maja Kocijancic, spokeswoman for EU foreign affairs commis-sioner Catherine Ashton, said: “The EU is very disappoint-ed with the verdict,” and that the court “did not meet the international standards for a just, transparent, and inde-pendent judicial procedure”. It also seems that Mrs Ty-moshenko’s jailing has put Ukraine’s hopes for Europe-an Union associate member-ship in jeopardy: the EU has now postponed a visit by Ukrainian president Viktor Yanukovych to Brussels as a direct response to the case.US State Department spokes-woman Victoria Nuland said her country was “deeply dis-appointed”, calling it a “po-litically motivated prosecu-tion… [raising] serious concern about the govern-ment of Ukraine’s commit-ment to democracy and the law”.In what looks like a U-turn as a result of the public out-cry over the sentence, the Ukrainian parliament has said it may consider decrim-inalising the bill under which charges were laid against Mrs Tymoshenko. This would pave the way for the former PM’s release; she would then only receive a fine. However, in a new twist, in-vestigators have reopened a second criminal case against the former prime minister, ac-cusing her of embezzling $405m (£256m) of state funds through Russian gas purchas-es during the Nineties. If found guilty, she could face 12 years behind bars.

tymoshenko verdict signals new battle in old gas war

yulia tymoshenko speaks at her trial on october 11

arms and the man: mr kalashnikov’s rifle has stood the test of time

yulia tymoshenko’s seven-year prison sentence in a ukrainian court has led to condemnation by the eu, the us and russia.

Vladimir babkinRUSSia now

trillion cu ft of gas is pumped annually from Russia to Europe via Ukraine.

million pounds: the fine handed to Mrs Tymoshenko on October 11.

years: possible sentence for former PM if found guilty in a new case.

3.5 119 12the numbers“ The guilty verdict in

the trial of Yulia Ty-moshenko marks the

beginning of a new phase in Ukraine’s relations with its most important partners: Russia, the European Union and the United States. The Ukrainian authorities are playing an all-or-nothing game, but it’s still unclear what they hope to achieve.

the Quote

Fyodor lukyanoveditoR oF RUSSia in gloBal aFFaiRS Magazine, in a coMMent to Ria novoSti:

the history of the gas warsRussia pumps around 100 bil-lion cubic meters (3.5 trillion cu ft) of gas annually to Europe via Ukraine. After the collapse of the USSR in 1991, Ukraine received cut-price Russian gas, but it still ran up a large debt. Moscow threatened to close the valve, and Kiev threatened to cut gas transit to Europe, but a further reduction to $50 per 1,000 cubic meters was renegotiated. However, Ukraine’s 2004 Orange Revolution, and subsequent

pro-Western stance, spelt the end of preferential rates for the former sister republic. Ukraine demanded higher transit fees; Russia insisted on higher prices for gas consumed by Ukraine. Negotiations remained dead-locked at the end of 2005, and on January 1, 2006, Gazprom cut off supplies, while continu-ing to export through Ukraine’s territory and accusing Kiev of siphoning off gas illegally. Three days later, a compromise five-year deal was signed. But

exactly three years later, gas supplies to Ukraine and on-ward to Europe were suspend-ed for almost two weeks, as more debts accumulated and irreconcilable differences over prices re-emerged. On January 19, 2009, after prolonged negotiations, new contracts were signed that, for the first time, contained a clear gas price calculation formula, and supply resumed. Those were the agreements for which Mrs Tymoshenko was convicted.

the contracts were signed by gazprom and naftogaz in full accordance with the law

Reports that the Russian Min-istry of Defence has discon-tinued purchases of the leg-endary Kalashnikov assault rifle made the news last month. In fact, the Russian military stopped buying Ka-lashnikovs about 15 years ago, because it has too many of them. Both the army’s stockpiles and factory ware-houses are overflowing with all versions of the rifle. According to Russian experts, the stockpiles would supply several armies the size of Rus-sia’s, in addition to all the world’s armies combined. But the claim that has perhaps caused the biggest sensation came from General Nikolai Makarov, Chief of the Gen-eral Staff, who admitted that the Kalashnikov no longer meets the needs of the Rus-sian military.The AK-47, in all its variants, has long since become a na-tional Russian brand along the lines of vodka, Yury Gagarin and the Kremlin. The Kalashnikov is, indeed, a unique assault rifle, the most reliable in the world. It can

kalashnikov Russian armed forces have stopped buying the iconic weapon, but demand overseas is as strong as ever

the easy-to-use kalashnikov is no longer the weapon of choice for russia’s military. but it’s still a hit with foreign forces of all descriptions.

endure any conditions in any environment, be it sand, swamp or snow; its barrel can be cleaned simply by wash-ing it under flowing water; anyone can easily learn how to fire, disassemble and as-semble, or fix it on the spot. So it is no coincidence that the “Kalash” is particularly popular in Africa, Asia, and Latin America, especially among insurgent or guerrilla groups. It’s very easy to grab, attach a loaded magazine and start firing.That said, the AK is not with-out its flaws – first among

them being its low accuracy rate compared to rival mod-els. While the first couple of bullets do hit the target, the rest tend to veer away. This is a very efficient weapon for a short urban skirmish or a massive infantry assault supported by armour and artillery. However, for one-on-one bat-tles or when accurate shoot-ing against enemy machine-gun or grenade-launcher installations is required, the Nikonov AN-94 “Abakan” or the AEK-971 are better choic-es. The silenced AS “Val” – in-

tended for overpowering an enemy protected by shrapnel-proof vests or 5mm steel plates, as well as non-ar-moured vehicles – could also prove useful.The fact is that Russia now has many weapons superior to the Kalashnikov in terms of combat specifications. Even so, an army officer with a thorough knowledge of weapons claims that the new models are only 10pc better.Mikhail Kalashnikov, now 91, is well aware of this situa-tion. When asked to comment on reports that assault rifles

superior to his AK have emerged, he said: “I know – but let them gain the author-ity of my rifle first, and we’ll talk then.”Indeed, the Kalashnikov’s au-thority is second to none. Over the 60-plus years of the weap-on’s existence, a whole fam-ily of assault rifles has been developed using the AK as a model, all following stand-ardised design and operating principles. Spare parts are in-terchangeable between dif-ferent versions, ; add-ons are available – such as barrel-mounted grenade launchers, night-optic sights, special-purpose ammunition, maga-zines and bayonets. And all these weapon systems follow the main Kalashnikov prin-ciples: simplicity, dependabil-ity and reliability.That Russia manufactures millions of these weapons and ammunition for them is an important consideration. Shutting down such a jug-gernaut to achieve a 10pc ef-ficiency gain is something no military leader in his right mind would do.The AN-94, the AEK-971, and the AS are still supplied to the army and the navy, albe-it in very small quantities in-tended mainly for special forces and intelligence units. Serial production to meet the needs of the entire Russian

armed forces would be pos-sible only when there is no longer conscription in Rus-sia: professional soldiers treat their personal weapons with a lot more care and respect than current conscripts do.Meanwhile, Kalashnikovs re-main in demand on the in-ternational weapons markets. Dozens of countries, includ-ing the United States, pur-chase them. Several years ago, Russia sold 100,000 Kalash-nikovs to Venezuela and promised to build a factory near Caracas to produce the rifle and ammunition. Press reports immediately linked the weapons to Colombian guerrillas – but those guer-rillas have at their disposal plenty of similar rifles made in China, Egypt, Bulgaria, Po-land and elsewhere. The AK is now manufactured around the world. Any weap-ons store in south-east Asia, Africa or Latin America is likely to carry a large selec-tion. Yet the most discerning armies still buy the rifle from Russia, thanks to its higher reliability and the fact it does not overheat after a few shots, which apparently the Chinese version tends to do. According to experts, any rifle costing upwards of $200 (£125) is Russian-made. An-ything cheaper than that is counterfeit.

Pensioned-off assault rifle is still going great guns around the world

Viktor litoVkinSpecial to RUSSia now

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Will the Occupy Wall Street movement be arriving in Moscow anytime soon?

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St Petersburg: three centuries of history and cultureNovember 29We travel through time in Russia’s imperial capital

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04 most readRussia now www.rbth.rusection sponsored by rossiyskaya gazeta, russia distributed with the daily telegraph tuesday_october 25_2011regions Tatarstan’s hi-tech transformation

http://rbth.ru/13410

the universiade in numbers

Looking out of the car win-dow, I cannot help noticing how fast Kazan is being re-built. State-of-the-art sports facilities are sprouting up everywhere, even along the road leading from the air-port to the city centre. The speed of development is being driven by the Univer-siade, or World University Games, which will be hosted here in 2013.Tennis great Marat Safin, a former world number one, Grand Slam winner and now a vice president of the Rus-sian Tennis Federation, took me on a tour of the city’s sports venues, starting with the Tennis Academy. It is a 20-minute drive from the centre, provided there are no traffic jams – which seem to be frequent. “This is because of the numerous construc-tion sites and road works that are being carried out in prep-aration for the Games. Let’s hope the traffic jams are tem-porary”, Safin says.

world-class playersThe Tennis Academy is im-pressive, indeed. A giant yel-low ball sits atop the long, slightly curved roof, as if bouncing off a giant racket. Not only does the new 8 5 , 0 0 0 - s qu a re m e t re (102,000-sq yd), 3,200-seat sports complex meet world standards, but, according to International Tennis Federa-tion president Francesco Ricci Bitti, it also “exceeds” the international require-ments. It has already hosted many international compe-titions, including the Davis Cup, Kazan Kremlin Cup and the Tatarstan Open. “Moscow would also benefit from such a centre but it is the only one of its kind in Russia,” says Safin.Kazan’s sports facilities are not concentrated in one place but scattered around the town to make them better ac-cessible to people. That said, there is an “epicentre” – the University Games Village, sit-uated next door to the Ten-nis Academy, which has many sports facilities including a brand-new swimming pool.We meet Rafis Burganov, Tatarstan’s youth, sports and tourism minister, who says: “Kazan hosts a lot of sports events, and it’s very impor-

infrastructure Impressive new stadiums and facilities are springing up in Kazan, making it a world-class venue for major sporting events

tant for us not to be mere spectators but to practise sports actively ourselves. I see this as our main goal, rather than putting Kazan on the map as a sports capital. “We’ll be able to call our-selves a sports capital when not only our clubs win a lot of awards, but the number of active sportsmen among our townsfolk tops that of any other Russian city.” Indeed, Kazan’s local teams are already doing well. In ad-dition to the success of its ice hockey club, Ak Bars – twice winner of the Gagarin

Cup – its football club FC Rubin and its volleyball club Zenit Kazan are teams that play to full houses, and are all increasingly assertive on an international level.

Fulfilling the legacyAs with Olympic Games sta-diums, the Universiade leg-acy requires that all facili-ties created for the game should continue to be used appropriately after the com-petitions are over. The facil-ities will be used by the local community, especially by local students.

However, they are already being put to good use. As part of the preparations for the Universiade, Kazan will host various European and World championships. And the Universiade are, them-selves, preparation for the 2015 Fina World Aquatics Championships. “We ob-served both events in China this year and saw that the aquatics championship is a very serious event”, Mr Bur-ganov said. “It is, in fact, the fourth highest-rated sports forum after the football World Cup, the summer

Olympics, and the Athletics World Championships.” Kazan will also host some matches in the 2018 World Cup at the stadium being built for the Universiade.Indeed, several important fix-tures were happening in Kazan on the day I visited: Russia was taking on Brazil in the Davis Cup World Group Play-offs; FC Rubin were entertaining the cham-pionship leaders Zenit; and a stage of Russia Cup circuit-car racing was taking place elsewhere in the city. “The funny thing is, this is just an

ordinary day in Kazan”, said Safin. “All in all, I think Kazan is Russia’s sportiest city after Moscow, leaving all the others far behind.” Safin sums it up: “Add to this the natural beauty of the place. Look at the pictur-esque Volga river running alongside our unique [and World Heritage-listed] Kremlin.” So, the 100,000 tourists and fans expected from 170 coun-tries for the Universiade will have some exceptional sight-seeing to look forward to in between the competitions.

sports capital of russia is playing a blinder, says tennis ace safin

open to all: tatarstan’s president, rustam minnikhanov, has ensured that local people can access all the new sports venues – including the tennis academy

the capital of tatarstan is reaping the rewards for its investment in sports facilities as it now attracts prestigious international competitions.

alexander erastovspecIal to russIa now

universiade – a study in sporting excellenceIn two years’ time, Kazan will host the 27th World Univer-sity Games, or Universiade (which takes its name from the words “university” and “Olym-piade”). From July 6-17 2013, more than 13,500 sportsmen and women and members of delegations from 170 coun-tries – plus about 100,000 fans – are expected to come to the competition. Aged between 17 and 28, all competitors are students in higher education,

post-graduates and graduates from up to two years preced-ing the Games. More than half the athletes are also Olympic competitors.The event, which takes place every two years, is second on-ly to the Olympics in size and significance. Russia has hosted the University Games just once before, in Moscow in 1973. The Games in Kazan will set a record for the number of sports contested, with

If you had left the ancient metropolis of Kazan in Tatar-stan a decade ago and re-turned today, you would hardly recognise it. The city’s signature white-and-blue kremlin with both Islamic minarets and Orthodox onion domes still stands majestic, elevated on the bank of the Kazanka River. The European-style narrow streets with their baroque ar-chitecture and large Soviet blocks still remain. But an infrastructure overhaul has added whole new neighbour-hoods to the area. The vibrant, pulsating city, which celebrated its millen-nium in 2005, now has a Metro, several sports arenas, one of the largest techn-oparks in Europe – Idea – and thousands of square yards of residential and of-fice space – all built since 2000.Low-scale crumbling homes of brick and stone are being restored, coated with fresh paint and, in some places, are giving way to steel and glass high-rises.“The city is changing so quickly,” says lifelong Kazan resident Khaidar Khaliullin, 57, who is also president of the Association of Small and Medium-Sized Businesses of Tatarstan. “New projects are growing like mushrooms.”

Readers of the Sovietsky Sport newspaper named Kazan as the sports capital of Russia in 2009. But the city prefers to be known as the country’s “third capital”, and in 2009 registered the right to brand itself as such with the Russian patent of-fice.The tourism industry is rap-idly developing in the city where Tolstoy and Lenin spent their student years. New attractions include a water taxi station on the his-toric Sviyazhsk Island and Kamskiye Fields campsite and spa.Billions of roubles have been invested in the republic’s manufacturing industries, which include mining, oil, chemical and agricultural production, as well as facto-ries that produce helicopters and boats among other things.Small businesses, like shops and distributors, are flour-ishing, accounting for 25pc of the region’s economy – sig-nificantly higher than the 20pc national average. Their local share will swell to 34pc over the next four years, ac-cording to the Tatarstan pres-ident Rustam Minnikhanov. In a recent study by the New Economic School and con-sulting firm Ernst & Young, Kazan is said to have the most favourable climate for entrepreneurs of all Russian cities. And according to Mr Khaliullin, small businesses will have plenty of room to grow as long as the Tartar-stan president continues actively to support business and promote foreign invest-ment in the area.

a decade of growth and transformationinvestment into russia’s ‘third capital’ has resulted in the development of new infrastructure and housing, as well as huge growth in business and industry.

khristina narizhnayathe moscow tImes

interview lInar YaKupov

the man who’s batting for tatarstan

Prepared bytim gosling

The Tatarstan Investment De-velopment Agency (Tida), headed by Linar Yakupov, pro-vides a one-stop shop for in-vestors, offering them with in-formation and advice. The agency also works to improve the business climate of the re-gion in order to attract foreign investment. It does this by lob-bying the government for busi-ness-friendly legislation.

what is tida working on now?We’re currently working on the creation of a regional in-vestment fund in Tatarstan that would hedge part of the risk faced by investors. This is very important because, unfortunately, despite all our rhetoric, Russia is not the most attractive destination for investment. Many chang-es have to be implemented at the federal level to improve the investment climate in Tatarstan. We hope the legal framework for the fund will be ready by January 2012.

how can the government help improve the business climate?Both Tatarstan and Russia are in very lucrative geo-graphic positions between Europe and Asia. We need to build roads across the breadth of the country to take advantage of this. To demonstrate the seriousness of our intentions to investors, we must show that we are able to provide such basic infrastructure. We’ve had “national projects” in health care, agriculture, housing and education. The government needs to an-nounce such a plan in road construction. We’ve done a lot to improve road quality in Tatarstan already.

what are your best success stories so far?The Alabuga Special Eco-nomic Zone has attracted scores of Russian and foreign investors to the point that its board is considering in-creasingly large projects every year. [Truck-maker] Kamaz’s joint ventures with Daimler and other compa-nies, as well as [car-manu-facturer] Sollers’s launch of a Fiat assembly line have also been successes.Fujitsu-Siemens, which makes hardware and soft-ware here for clients includ-ing Pepsi and Volvo, has seen explosive growth – creating serious competition for sim-ilar ventures in India. And we are developing aviation and helicopter factories which offer enormous poten-tial for developing the sci-entific base.We want investors to see that we are not only a source of chemicals and raw ma-terials, but also a hi-tech and manufacturing hub with a highly skilled work-force.

competitions in 27 separate disciplines. As well as track and field athletics, swimming, football, boxing, tennis and volleyball, five other sports have been included in the programme for the first time: chess, badminton, belt wres-tling, the Russian martial art of sambo, and rugby sevens. Russia is hoping that the Universiade in Kazan will be a successful prelude to the 2014 Winter Olympics in Sochi.

Tatarstan’s mosques now stand harmoniously side-by-side with Orthodox church-es, but it is traditionally a Muslim region and it still has a Muslim majority. This, cou-pled with the region’s huge development potential, makes it a good proposition for Muslim investors.Two Islamic funds have re-cently launched operations in Tatarstan. The first is the Malaysian private equity firm AmanahRaya Capital Group, which has already launched several projects in the repub-lic. “We bypassed Moscow and came to Kazan, as it of-fers the most attractive in-vestment climate,” says man-aging director Dato Ahmad Rodzi Pawanteh.The fund’s first project was the Kazan Halal Hub, which imports halal meat and other products for the region’s Muslim population. Once es-tablished, the fund financed the construction of a halal meat processing plant in Baltash, 62 miles from Kazan,

the muslim-majority region of tatarstan has proved to be an attractive investment destination for funds – for both russian muslims and foreign investors based in muslim countries.

where local producers can also bring their meat to be processed according to Is-lamic rules. The latest phase of the project set up an Is-lamic fund-management company that will invest in halal-related projects. The management company will also hold a pilgrimage fund to finance a Hajj for local residents.“We have been very success-ful with this sort of fund in Malaysia, and it was an ob-vious product to bring to Tatarstan,” says Mr Pa-wanteh. “But we are also working with local govern-ment to raise funds on a pri-vate equity basis to bring in foreign investment to the re-gion.”According to Mr Pawanteh, local government has been very active in promoting for-eign investment in the region, and has taken a stake in these funds as a way of re-assuring foreign investors that it is willing to share the risks with them.The second Muslim fund to establish itself recently in Tatarstan is the Foras Inter-national Investment Compa-ny. Representing Saudi money, it has launched an investment vehicle with the newly established Tatarstan International Investment Company. The $50m fund

will focus on the region’s strengths in biotechnology, nanotechnology and IT. The company was inaugurated in June; the founding inves-tors have contributed $10m, and are in the process of rais-ing the balance.

“We are focused on the Volga region and the attractive in-vestment climate the govern-ment has created here, with tax breaks and incubators,” says Amizan bin Mohd Nor of Foras. “One of the most attractive elements in this re-gion is the high level of sci-ence and engineering, espe-cially in things like civil aviation,” he adds.In Soviet times, Kazan was a centre of learning, and its universities still churn out many of Russia’s best engi-

neers. It is also home to a flourishing aviation industry and automotive sector. “We have 20 projects in the pipe-line, and 80pc of them are brownfield that we will de-velop over the next three years,” says Mr Nor. “But probably the most possibil-ities are in the technical avi-ation sector.” The details of these projects are still under negotiation, but Mr Nor is particularly excited by a project to make aviation res-cue vehicles. “The companies

here are advanced, and the level of technology is as good as anything I have seen in Europe,” he says. “The trouble with Europe is that it is a highly saturated market. In Russia, we can easily find companies where we can really increase the value, with willing buyers in the Middle East and be-yond.” To help investors, Sukuk (Islamic no-interest bonds) are to be launched in Tatar-stan soon.

Fair shares with a muslim heritage

nick watson busIness new europe

worshipped: the kul sharif mosque stands in the grounds of kazan's kremlin

one of the most attractive elements in this region is the high level of science and engineering

a culture of toleranceIn the 19th century, Tatarstan became a centre of Jadidism, an Islamic movement that preached tolerance of other religions. However, after the October Revolution, religion was outlawed. Today, 52pc of the 3.8 million population are Muslim, with Sunni Islam the most common faith. The Russian Orthodox Church is the second largest active religion with an estimated 1.6 million people. Tolerance of other re-ligions still prevails: at all pub-lic events, both an Orthodox priest and an Islamic mufti are called upon to be present.

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05most read Investment drop leaves economy vulnerable to shock http://rbth.ru/13577 Business & FinanceRussia now www.rBth.ru

section sponsored By rossiyskaya gazeta, russia distriButed with the daily telegraph tuesday_octoBer 25_2011

alexey moiseev

specIAl to russIA now

liquidity in the bank-ing sector has been drying up over the past two months. It

was a liquidity crunch that caused the crash in 2008, when the Russian govern-ment was forced to bail out the banks to the tune of $66bn (£42bn) to keep the financial sector afloat.The banking sector did sur-vive (unlike in 1998), thanks to the now-ousted finance minister, Alexei Kudrin, who ensured Russia had about $600bn in reserves.Now, liquidity is drying up again. If liquidity goes neg-ative, bankers will start worrying about who is going to go bust, and that will mean lending between banks will freeze again.So, are we headed for the abyss? Certainly Russia is in a dangerous place, as confidence is clearly fading fast. It looks increasingly likely that the EU is going to try to ring-fence Greece, and then let it default. This jolt will knock Russia’s con-fidence and could send it over the edge. However, if the shock does come, Russia is better pre-pared now than it was in 2008. Firstly, knowing a shock is coming is half the battle, as one of the reasons that the crisis hit Russia so much harder than Western economies was that the 1998 devaluation was fresh in everyone’s mind. So, they simply stopped doing busi-ness until it was clear how the crunch was going to play out. The fact that Rus-sia’s economy bounced back so fast will go a long way to muting the impact this time – if the crisis comes.Secondly, Russia is in a much stronger economic position than it was going into 2008. Then, most of the damage had already been done by the borrowing binge that preceded the

pear, after all. But Russia’s experience during the sec-ond half of the Nineties shows that foreign financial aid reduces the incentive for tough reforms, generates hope that all problems will resolve themselves and, most importantly, only makes the inevitable decline more dif-ficult. Herein lies the answer to the question of what coun-tries like Russia can do to help Eurozone nations: it can offer the benefit of its expe-rience.In Russia in 1998, it had long been hoped that foreign fi-nancial aid would somehow solve all the problems, but that didn’t happen, and in August of that year the gov-

ernment defaulted. After that, it became clear that there was no one else to de-pend on. Tough financial re-forms were carried out, back-breaking social obligations were scaled back and, in gen-eral, the country finally re-alised that it had to roll up its sleeves and get to work.It was against this back-ground that a political con-solidation of society took place, which allowed the re-form process to continue. As a result, Russia had its high-est period of growth for al-most 40 years, which was only partially – and only in the later years – the result of high oil prices.Russia’s experience has shown that in times of finan-cial crisis there is no alter-native to painful reforms – and no one can save you from that.

Alexey Moiseev is head of macroeconomic analysis at VTB Capital.

t he question of Brics (Brazil, Russia, India, China and South Africa) countries, in

particular Russia, offering Europe salvation evokes historical parallels. Among others, we are reminded of how Emperor Nicholas I’s troops rescued the Austrian Empire from popular upri-sings in 1848-9. It seemed then that Russia was, in the words of the emperor, “the most powerful country in the world”, just as it had been in 1814, after Russian troops entered Paris.But even then, Russia’s mil-itary strength concealed the urgent need for modernis-ing its economy, which only occurred a full seven years later in the aftermath of the Crimean War.The Crimean campaign re-vealed that behind the bril-liant façade was an econ-omy that, overall, could not match up to those of Brit-ain and France. A some-what similar façade exists today. The country has al-most no external debt, fall-ing inflation, a respectable rate of economic growth, a balanced state budget, current account surplus, and huge international reserves. But just as it did almost 200 years ago, all of this con-ceals the same urgent need for modernising Russia in nearly every area of life. However, in contrast to Em-peror Nicholas I, our cur-rent leaders, Prime Minis-ter Vladimir Putin and President Dmitry Medvedev, speak openly about it.So then, can Russia help Europe? Yes, but not so much with money. Yes, the Brics have astronomical foreign exchange reserves, which can, and probably should be invested in Eu-rozone bonds – if those ap-

no pain no gain – for east and west alike

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russIA now

rocking russian boat can ride out the latest storm

collapse. Russian banks and companies had tapped inter-national capital markets dur-ing the boom years. Worse, many companies had used their shares as collateral, which led to so-called “mar-gin calls” during the very worst of the crisis. This time round, there will be few, if any, margin calls, as the 2008 crisis squeezed all these deals out of the market.Big companies have started to borrow again, but anoth-er difference from the crisis has been that the debt pro-file of Russian companies and banks is much better now than it was two years ago. Companies have lengthened the maturities of their loans to medium-term debt, while swapping a lot of their for-eign borrowing for rouble loans. The banks are domi-nated by the state, so the government is in a stronger position to restructure debt

if it needs to do so.But everything will depend on how well the EU manag-es the Greek problem. Sure-ly, opting for a controlled Greek default is an extreme-ly risky strategy and one that the more nervous emerging markets, such as Russia, will not welcome. Banks are built on trust, and defaults are, by definition, a betrayal of that trust. A controlled devalua-tion is the logical route, but if it is badly managed then fear could get ahead of the control mechanisms. If this fear is large enough, even healthy banks can go bust.There is plenty of room for surprises, and these could easily lead to a meltdown.

Ben Aris is the editor and publisher of Business New Europe.

gloBal russia Business calendar atomeco conFerence october 31–november 1, world trAde centre, moscowThe focus of this two-day event is the latest trends and achievements in the fields of radioactive waste and spent nuclear fuel management, decommissioning, decon-tamination and environmen-tal remediation. More than 600 representatives from 100 organisations, agencies, companies and R&D institutes will take part from Russia, USA, France and the UK. The timely resolution of these issues in the most cost-effective and public-ly acceptable way has been making headlines recently, following the renaissance of nuclear energy – worldwide and, specifically, in Russia. http://atomeco.ru/english/

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Business in BrieF

coca-cola opens 15th plant in russiaCoca-Cola unveiled its new production facility near the southern Russian city of Rostov-on-Don last month. The plant has the capacity to produce 450 million li-tres of soft drinks a year and is equipped with Russia’s largest waste-water purifi-cation facility.Currently, the plant is run-ning only three production lines, but by 2014 all eight should be fully operational. However, even in its current mode of operation, the plant fills 78,000 bottles and al-most the same number of cans per hour. Since its entry into the Russian market in 1994, Coca-Cola has invested more than £1.9 billion into the local economy, and plans

to invest the same amount over the next five years. “To-day’s announcement under-scores the Coca-Cola system’s long-term strategy of invest-ing in Russia,” Coca-Cola CEO Muhtar Kent an-nounced in a statement dur-ing the plant’s opening.

domodedovo to become £2.46bn ‘aerotropolis’ An ambitious 10-year devel-opment plan to turn Domod-edovo Airport into an “aero-tropolis” was announced last month by the private airport’s operator East Line Group. An aerotropolis is a city built around an airport, as opposed a city with an airport on its outskirts. The new blueprint would effectively result in the rise of a new city on Mos-cow’s southern outskirts.

East Line’s plans – which in-clude a third runway, a re-vamped landing apron and expanded terminal facilities – are taking forward a con-cept that the airport’s man-agement began developing in the late Nineties.Dmitry Kamenshchik, chair-man of the airport’s board of directors, said Domodedovo forms the kernel of a “syn-ergistic conurbation” of com-mercial development that could stretch up to 12 miles from the airport itself.

A nine-year project to up-grade the airport’s first run-way, due to be fully com-pleted this autumn, has already made Domodedovo the first Russian airport cer-tified to receive the Airbus A380, and work on a third runway is set to begin in the first quarter of 2012, accord-ing to the Moscow Times.Also next year, construction will start on a five-year, £510 million renovation of the airport apron, the area where aircraft load and re-fuel, in a bid to increase the number of parking spac-es.Documents recently distrib-uted by the company show that the airport’s construc-tion projects are expected to cost £2.46 billion — while privately funded develop-ment projects, including the hotel and the cargo village, will require an additional £266 million.

international Forum ‘russian regions’: investment appeal and development strategiesnovember 9–10,moscowThis forum has become the premier event among the regional state bodies of the country as well as international businesses that are interested in further strengthening mutually beneficial co-oper-ation and investment in the economies of the Russian regions. The event is supported by the Chamber of Commerce and Industry of the Russian Federation. http://icenergy.co.uk/event51.html

tidy up at home and the guests will come

interview Anton rAkhmAnov

the troIkA dIAloG mAnAGInG dIrector outlInes the chAnGes

needed to mAke russIA more AttrActIve to foreIGn Investors

what sectors of the russian economy do you think are most undervalued? The Russian market is cur-rently the cheapest of the Bric (Brazil, Russia, India and China) countries. Compare Russia’s price/earnings ratio of 6 with Brazil’s 8.5, India’s 14 or China’s 15. The most un-dervalued companies are in our traditional industries, such as oil, gas, metals, and mining; even the consumer goods and tech sectors aren’t cheap in comparison.

why is the russian market less pricey than others?Because Russia hasn’t been able to kick its oil habit. This makes for extremely high macroeconomic risk. Another problem is that the current price of oil is out of kilter with supply and demand. Most likely, investors don’t under-stand what a fair value of “black gold” really is amid un-certainty over money issues from leading central banks in the US and Europe. If the situation deteriorates further, the monetary author-ities for the developed econ-omies will print more money. The prospect of this happen-ing makes commodities one of the few instruments inves-tors will consider, as it is dif-ficult to quantify the risks in-herent in Russian stocks. Stimulating domestic demand and establishing a serious do-

over-reliance on oil, under-developed domestic capital markets and lack of demand at home are all problematic, says anton rakhmanov.

mestic market for capital would stabilise the market sit-uation and may serve as a cat-alyst to change. Of course, this also includes pension reform. If pension savings were invested more actively they would become a source of domestic market stability. Once we see that the US is not slipping into recession and Europe is suc-cessfully sorting out its internal problems, risk pre-miums built into current stock valuations in both emerging and developed markets should gradually diminish. This would allow Russia to start catching up with the other Bric countries.

third-tier stocks are the most profitable yet the most risky, both in the west and in russia. how actively are foreign inves-tors buying them?Not at all. This must be the result of a diminished appe-tite for risk, since the second and third tiers are consider-ably less liquid, so the risks tend to be greater. The per-formance of the relevant in-dices clearly shows as much: the RTS Index has lost 6pc this year to date, while the RTS-2 is down 13pc. Inves-tors are still fleeing into the dollar, particularly by scoop-ing up US Treasuries.Russia’s third tier will remain undervalued until both do-mestic and external investors’

appetites for risk improve. Until then, only second- and third-tier stocks with an in-trinsic history will be in de-mand – such as large poten-tial dividends, a buy-back process, or an M&A [merger and acquisition].

the miceX index and the rts index plan to merge by the end of the year. what effect will this have on trading partici-pants, especially foreigners?In theory, a united stock ex-change should be good news, as it would provide deeper li-quidity and be able to imple-ment new and advanced tech-nology faster. I hope very much that everyone will

benefit from the merger. There won’t be a lot of foreign play-ers, though, as the quantity and quality of international participants is determined by the current macroeconomic situation in the country. Big foreign pension funds and big capital won’t come rushing into Russia until reasonably serious and qualitative chang-es take place in our country.As I have said before, this re-quires establishment of a sta-ble domestic capital market. Volatility has to subside.

what instruments do you believe the russian market is critically lacking? It’s not any particular instru-ment that is lacking; it’s mar-

nikita dulnevrussIA now

ket capitalisation and, espe-cially, domestic capital. Though I wouldn’t deny that liquid derivative instruments are also in short supply. Sev-eral steps need to be taken to resolve this problem. Op-erations with derivatives should be regulated and spelt out in technical detail. De-mand for those derivatives also needs to emerge. The leg-islation should allow stock market players, including mutual and pension funds, to invest in derivatives to gen-erate actual investment de-mand for futures and options, rather than simply leaving it all to speculators. It is possible, even now, of course, to try to offer the mar-ket a sufficiently sophisticat-ed derivative instrument, but it wouldn’t find any takers. It would be like trying to sell Bentleys in the Sahara.

how do foreign investors generally view the russian economy? do they consider it a phenomenon, or just an-other emerging market, like china’s or india’s? or do they see it as a developed market?Unfortunately, Russia’s com-modity-based economy is not perceived to be very efficient with its operating and invest-ment risks. If investors con-sidered it a unique phenom-enon, it would be trading at a premium rather than a dis-count compared to other emerging markets. It appears that there aren’t currently any macroeconomic condi-tions that will attract long-term and serious investments into the country.Russia has always been a hos-tage to the global situation.

Whenever instability increas-es on the global markets, Rus-sia’s risks increase exponen-tially. The problem is that Russia has done little to es-tablish and sustain develop-ment of the domestic market and consumer demand, some-thing that China has been doing rather successfully and that Brazil has recently em-barked on.Furthermore, Russia has yet to learn how to control do-mestic public spending; while it keeps increasing, the social and economic situation re-mains as deplorable as ever. Almost all social sectors, in-cluding education and health care, are under-invested. The ranks of public servants con-tinue to expand, having almost tripled over the past seven years. All this comes down to a rather simple thing: the fed-eral budget is balanced as long as oil costs $115 [per barrel].

what percentage of foreign investors are asian, and what sectors do they prefer?While there are no hard num-bers, their share is not that large. However, China has the greatest investment potential among Asian countries. The People’s Bank of China and the country’s treasury are among the world’s biggest in-vestors after the US Federal Reserve. The interest of Rus-sian investors and officials to Asian financial centres is growing. Two big events are held annually – the Russia-Singapore Business Forum and a similar conference in Hong Kong – both of which attract business people and government officials from Russia and Asia. The forum’s international status and its location in one of the world’s fastest growing regions make it perfect for promoting Rus-sia’s investment appeal.

foreign capital won’t come rushing into russia until serious and qualitative changes take place

russia has done little to establish and sustain the domestic market and consumer demand

the fact that russia’s economy bounced back so fast will go a long way to muting the impact this time

In times of financial crisis, there is no alternative to painful reforms – no one can save you from that

studies: Leeds Business School; Certification from the International Securities Market Association.

eXperience: 15 years on the debt and equity capital mar-kets and extensive experience

Biography

in wealth management. He joined Troika Dialog in 2010 after working at Renaissance Investment Management, where he oversaw an invest-ment portfolio of blue-chip and second-tier securities worth £950 million.

property homeowners see the growth of a new bricks-and-mortar bubble

with house prices returning to pre-crisis levels, properties are pouring on to the market and abandoned building projects are being finalised.

For many cash-strapped Rus-sians, the global downturn of-fered a chance to buy a new home. But only if they were quick: the market has recov-ered sooner than expected and prices are already back to pre-crisis levels. Russia has a very high level of home ownership (around 80pc), but almost no one has a mortgage. This is because the state simply gave people the homes they occupied after the collapse of the Soviet Union, in what must be one of the biggest transfers of wealth in history. In 1990, Russians had an av-erage of 16.8 sq m (20 sq yd)

ing the worst of the crisis. Now the average price of Moscow residential real es-tate has soared – from around £572 per sq m in 2003, when mortgages first became avail-able, to £2,540 in January 2010, and reaching £3,240 in August this year. And as Ms Thain points out, there is still a huge housing shortfall in Moscow, and the country as a whole.

supply and demand In the economic boom (from about 2006), real estate was a “get rich quick” deal for many businesses that poured money into ill-planned projects, says Darrell Stana-ford, senior adviser for CB Richard Ellis Russia. Accord-ing to Mr Stanaford, in the spring of 2008, over one mil-lion sq m of new office space was added to the city’s stock of 12 million sq m, so when

prices began to fall, the build-ing projects came to a halt. The reanimation of the mar-ket was clearly seen in early September, when government statistics agency Rosstat re-ported a jump in July of con-struction volumes, up 17.8pc year-on-year after being mor-ibund for most of the previ-ous 18 months. Developers who had borrowed heavily to finance projects have largely restructured their loans – or lost their assets to banks – and are now raising fresh money to finish half-complet-ed buildings that were aban-doned during the crisis.“Before the crisis there were no vacancies and the trick was to do the deal fast before prices went up further – if you could get the building at all,” says Mr Stanaford. “Now there is supply – but the gap between supply and demand is closing fast.”

On the move: house prices rise again

tall order: 80pc of russians want to move, but few are able

Ben arisbusIness new europe

of space per person. This property is worth around £1,900 billion today – about twice the value of the GDP. While eight out of 10 Rus-sians say they want to move, very few are able to do so. There are only about 300,000 mortgage contracts in the whole country: less than half of 1pc of the population has borrowed from a bank to buy their home. “During the worst of the crisis, the top end of the market was not affected at all, as no one wanted to sell,” says Ekaterina Thain, founder of Chesterton Rus-sia, a Moscow estate agency.“They didn’t want the cash as they had nowhere to put it. In business class, prices came down by 30pc, and in economy class they dropped by 50pc.” Any Russians with money ploughed it into real estate, the preferred asset class, dur-

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06 most readRussia now www.rbth.rusection sponsored by rossiyskaya gazeta, russia distributed with the daily telegraph tuesday_october 25_2011comment & analysis Technology: innovation waits for a

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Working toWards a neW unity

dmitry babichspecial to

russia now

sergei markedonovspecial to rn

the “new deal” between Vladimir Putin and Dmitry Medvedev, which effectively

brings the former back to the Kremlin for the next six years, was a tremendous dis-appointment for the major-ity of Russia-watchers in the mainstream western media. In Russia, the negative reac-tion was much more muted. The registered opposition parties – primarily the com-munists and the social-dem-ocrats from the Fair Russia party – expressed their dis-satisfaction with a sense of doomed near-indifference (“We did not expect anything else from the Kremlin”). The only members of the Russian elite who were in-deed disappointed and vocal about it were several people from President Medvedev’s entourage, who had obvious-ly planned on careers during their boss’s second term in office. These people felt them-selves snubbed.So why did Mr Medvedev prefer to snub them (and a lion’s share of Russia’s liber-als with them)? Which holy truths did they ignore? The answer is – the main ones.Political scientist Stanislav Belkovsky has singled out the two main priorities of the Russian elite since the “rev-olution” of 1991. First, to pre-serve political stability; sec-ond, to get the new Russian elite integrated into the west-ern elite – but not at the ex-pense of the first priority. Translated to normal human language, this means that the Russian elite is ready to co-operate with the west, as long as that co-operation does not jeopardise its grip on

control and compromise: the enigma of vladimir putin

any possibility of destabili-sation. Mr Medvedev took for himself the second priority, rather ceremonial duties of making Russia attractive and open to the west, to a degree that does not endanger its internal political stability. The west was disappointed: a Gorbachev-style conflict inside the elite never hap-pened. Moreover, it also transpired that Mr Putin’s economic policy actually h a d l e g s .

power. In other words, it does not want to repeat the fate of Mikhail Gorbachev, who was the first Soviet leader to be invited to a G7 summit in the summer 1991 – in return for actually relinquishing his power inside the Soviet Union.The first priority spawned a sort of code of behaviour among the Russian elite’s members. The first rule in this code is to prevent by all means any sort of conflict among various groups inside the elite, especially if faced with pressure from abroad. Several months before be-coming president in 2008, Dmitry Medvedev published an interview in Expert mag-azine where he analysed the collapse of the Soviet Union and tried to draw lessons from it. One of his main conclusions was that the Soviet Union was destroyed by a conflict inside the Po-litburo and inside the Sovi-et political elite in general.The future president was in-tent on not repeating the ex-perience of Gorbachev. He has kept his promise until now, avoiding by all means a conflict with Vladimir Putin, so much anticipated (and, perhaps, secretly de-sired) by the mainstream media and elites of the west. In fact, in the framework of the system created after Medvedev’s election in 2008, Prime Minister Putin and President Medvedev divided not only powers, but also priorities. Mr Putin was re-sponsible for the first pri-ority – running the country’s internal politics and econ-omy in a way that would preclude

the year 2011 is full of landmark anniversa-ries, and most of them are associated with

the collapse of the Soviet Union. The most important lesson of the past two dec-ades has been understand-ing that the act of dividing up a union doesn’t in itself solve the issues of sustaining newly independent states or guarantee their future pros-perity and social harmony. Regardless of their attitudes towards their common past and each other, the former Soviet republics were linked by thousands of different threads that have proven dif-ficult to sever once independ-ence was gained. Conse-quently, since 1991, they have constantly fluctuated be-tween integration processes and centrifugal tendencies. An article by Prime Minis-ter Vladimir Putin published in Izvestia on October 4, 2011 sets out his vision for improv-ing relations between Russia and the independent states. The article’s title is telling: A New Integration Project for Eurasia – A Future That is Born Today. Although Pu-tin’s text deals with quite a specific integration project, the Common Economic Space, which is scheduled to launch in January 2012, it also raises some broader is-sues. The fact that Putin’s article appeared on the eve of a new election cycle, after the prime minister announced his pres-idential bid, means that it is being viewed as his agenda for the region. Because of this, the article has been sub-ject to scrutiny both at home and abroad. But this isn’t just about Putin’s ambitions. In the 20 years since the col-lapse of the USSR, the West has viewed any attempt by Moscow to bolster its activ-ities in post-Soviet territo-ries with caution. This ex-plains the hard-line response from Washington and its Nato allies in recognising the independence of Abkhazia and South Ossetia (the first case of redrawing inter-re-publican borders since 1991), as well as their reluctance to work with the Collective Se-curity Treaty Organisation (CSTO) which is perceived as a tool of Russian domina-tion rather than as a struc-ture for integration. Added to that, Nato is suspicious of Russian military presence an-ywhere in the former Soviet Union. It sees Russia’s “strengthening presence” in Eurasia as a bid to restore Soviet hegemony.Has Putin’s article helped galvanise those fears? Or has it made a case against alarm-ist approaches to Russian for-eign policy and foreign trade? On the one hand, Putin has unequivocally stated that his proposed model of econom-ic integration has nothing to do with the USSR. “It would be naive to try to revive or emulate something that has been consigned to history, but these times call for close in-tegration based on new val-ues and a new political and economic foundation,” Putin wrote. At the same time, the Russian PM pointed out that the Common Economic Space will be based on the principle of open borders be-tween its members – hence his remark about the need-lessness of erecting border lines between Russia and Ka-zakhstan, a boundary com-parable in length to the US-Mexican border. Moreover, if there are any comparisons made in Putin’s article, they are with the EU and the Eu-ropean integration model. Mr Putin emphasised the need not only for close examina-tion of the EU’s experience, but also for co-operation be-tween a new, integrated post-

Soviet entity and the world’s leading economies in both the West and the East. The article is free of both nostal-gia for the Soviet past and a confrontational attitude to-wards other countries and integration projects. It pays great attention to the Com-monwealth of Independent States (CIS), by virtue of it being the oldest and best-known integration project. Many of the prime minister’s assessments appear spot-on. Looking back, it’s clear that the CIS structure has helped solve problems, such as di-viding up the Soviet military legacy, establishing national armed forces, recognising borders, co-ordinating immi-gration policy (ensuring vi-sa-free travel), implementing an energy pricing policy and recognising Soviet education diplomas across the CIS.However, certain problems have led to stagnation in the CIS’s development and un-dermined its effectiveness. These include trade wars be-tween member states, and the political tensions that have contributed to revisions of immigration policy. On top of that, the CIS’s internal in-tegration mechanisms have been blocked by a system of bilateral relations between the newly independent states, which have become a higher priority for them. Georgia’s withdrawal from the CIS in 2009 set a precedent for reconfiguring the structure. And there is no guarantee that bilateral relations won’t become an obstacle for inte-gration within the Common Economic Space as well.In general, the article over-

looks the important issue of fragmentation of the post-Soviet territory. But what should the Russian project for Eurasia be if it isn’t mod-elled on the Soviet example, and doesn’t lend itself to the framework of European in-tegration? This question re-mains unanswered. Whatever one personally feels about Vladimir Putin or Russia’s foreign policy, Mos-cow holds geopolitical and economic leadership in the territory of the former Sovi-et Union today. But this lead-ership is based on history, and its continuation is not automatically guaranteed. In order to maintain it, instead of a “mechanism for a civi-lised divorce” (to quote Pu-tin’s own assessment of the CIS back in March 2005), new and effective integration processes are needed to give a fresh impetus to both the internal development of new independent states and to their co-operative aspira-tions. But in order for this to work, a serious reflection on the mistakes of the past and how to properly address them is needed.

Sergei Markedonov is a visit-ing fellow at the Centre for Strategic and International Studies in Washington, DC.

russian compass sWings east

everyone is trying to guess how Russia’s foreign policy might change after Vladimir

Putin takes over as president. Most expect Putin’s Russia to resume its anti-western policy. In this respect, it is symbolic that Putin’s first visit in his new capacity as president-in-waiting was to China, and that, in his first keynote article, he offered to create a Eurasian Union of ex-Soviet nations. The question of how the “western" and “eastern” com-bine in Putin’s vision is much more subtle and complex in nature.In the eyes of many observ-ers, “Putin-2” (of the second term, from 2004-2008) com-pletely overshadowed “Putin-1” (of the first term, 2000-2004) with his strongly pro-western agenda: from close co-operation and pros-pects for European integra-tion to concessions to the United States (the closure of military bases in Cuba and Vietnam, position on Central Asia, and so on) and advanc-es to Tokyo on settling the Kuril Islands dispute. The result, however, was dis-appointing. Who should be

held responsible for those failures is a question open to debate. In retrospect, one can hardly blame Vladimir Putin for not trying to bring Rus-sia into the western orbit during his first term. The lack of the desired result helped

fyodor lukyanovgazeta.ru

Thanks to the huge stabili-sation fund and some rather liberal economic policies, Russia survived the 2008-2009 global financial crisis. Mr Putin managed to create the Customs Union of Rus-sia, Belarus and Kazakhstan. Thanks to that union, bilat-eral trade between Belarus and Kazakhstan increased sixfold, and the two coun-tries’ trade with Russia is also

time, Russia was also build-ing ties with Asia, especially China and India, creating re-gional structures of varying cohesion, from the Shanghai Co-operation Organisation to the Bric alliance. Moscow was making it clear to the United States (in terms of military and political ac-tivities) and Europe (in terms of energy) that it had alter-natives. On certain subjects the west listened carefully and expressed concern; on others it would simply brush Moscow’s claims aside.There is still a tendency to see Russia’s Asian policy as a means for putting pressure on Europe. Yet this has be-come irrelevant for one sim-ple reason: whatever Mos-cow’s relations with the US and Europe, China is now Russia’s major neighbour, wielding a strong influence and likely to wield an even stronger one. Vladimir Putin is not one of those who is fascinated by China, and he is fully aware of the risks inherent in the rapid and very impressive growth of the Asian neigh-bour. But he also understands that Russia will have to seek ways for peaceful and friend-ly coexistence with Beijing; there is not another growth and development engine in Asia that could rival China.

rapidly growing, according to the information of Svet-lana Glinkina, a senior re-searcher at the Institute of Economy at the Russian Academy of Sciences.Does all of this make Mr Putin an “old-style Soviet leader”? No. Unlike the So-viet leaders, Vladimir Putin has nothing against integra-tion with the west – if it does not threaten the country’s po-litical stability. Unlike the

Soviet leaders of yester-year or the communist opposition of today, he does not dream of the rebirth of the Soviet

Union. The Eurasian Union, re-cently suggested by

Putin, is actually an economic union of sov-ereign states, open to

the rest of Europe and the United States for co-op-eration and even integration.

In fact, it was under Putin that Russia shed some of the last vestiges of Soviet attitude to its neighbours. Under Putin, Russia stopped s u b s i d i s i n g former Soviet “fraternal re-publics” with

cheap ener-g y e x -ports. En-e r g y

re l a t i o n s between Rus-

sia and Belarus, R u s s i a a n d

Ukraine, as well as other new in-

d e p e n d e n t

And, of course, if Russia wants to upgrade its Far East region, it can hardly do so without China. Lofty phrases about modern-isation and technological al-liance with China – a new topic apparently inspired by Putin’s visit – mean in prac-tical terms institutionalisa-tion of the existing model: Russian raw materials in ex-change for Chinese products. The issue is the conditions, not the essence. Instead of dreaming about Silicon Valleys, Russia should go ahead with real modern-isation, focusing on efficient use of raw materials and market diversification, in terms of both geography and product range. In other words, it is not the US and Japan that should be chosen as models, but rather Australia and Cana-da – as highly developed na-tions whose growth is based on plentiful natural resourc-es. In this sense, China is vital, with its steadily grow-ing consumption and signif-icant surplus of cash. Vladimir Putin has made no secret about his view of hy-drocarbons as Russia’s main resource and guarantor of political weight throughout the 21st century. However, in contrast with Europe, where Russia has been pursuing a

the act of dividing up a union doesn't in itself solve the issues of sustaining newly independent states or guarantee their future prosperity and social harmony

nato is suspicious of russian military presence anywhere in the former soviet union seeing russia's 'strengthening presence' as a bid to restore soviet hegemony

whatever Moscow’s relations with the us and europe, china is russia’s major neighbour

rebrand Putin-2 as the au-thor of the anti-American speech in Munich. The foreign policy message of Putin’s second term was: “So you don’t want to treat us like equals? Then I’ll make you…” And he did. What was the role of the east – especially China – in Rus-sia’s foreign policy of the 2000s? The early Putin, de-spite his multi-faceted ap-proach, was largely pro-west-ern – in the sense that Moscow’s foreign policy was focused on ties with the US and Europe. At the same

states, were put on firmer financial footings. Under the Putin-Medvedev tandem, Russia stopped re-sponding to calls for military assistance from the former Soviet republics. When Kyr-gyzstan appealed for Russian intervention in 2010 to quell ethnic violence in the city of Osh, Russian troops never left their barracks. The Russo-Georgian war in South Ossetia in 2008 was no exception to that rule: Russia was simply protect-ing its citizens (90pc of the Ossetian minority in Geor-gia have Russian citizenship). In fact, it was a war for the first priority of the Russian elite, since a Saakashvili vic-tory would have inevitably led to a loss of face in the North Caucasus and subse-quent destabilisation. De-spite all of these facts, the west continues to view Mr Putin negatively. Maybe it is time for a change? After all, the two contradic-tory priorities of the Russian elite and its present unity were both products of west-ern policies. Unlike Poland or Hungary, Russia was not offered a clear European per-spective; there was nothing to argue about for “liberals” and “isolationists” inside the Russian elite. There was only one route to survival left: “sovereign democracy”. This meant staying together, keep-ing power, and waiting for the west to sober up to Rus-sian realities – just exactly what Putin and Medvedev are doing.

Dmitry Babich is a political commentator for news agency RIA Novosti.

pipeline diplomacy and pol-icy since the Sixties, it is only just beginning to feel its way in Asia. One such overture is Mos-cow’s recent proposal that Pyongyang becomes Russia’s main partner in construct-ing a trans-Korean gas pipe-line, in exchange for a re-think on the nuclear programme and a peaceful settlement. Yet Russia’s abil-ity to promote its goals in this way is rather limited: where-as in Europe Moscow has a solid footing, it is only just beginning to gain political weight in Asia. But there is no other way. Putin’s visit to China, in his new capacity as future pres-ident, turns a new page. His next term’s agenda will be dominated by efforts to de-velop a model of peaceful co-existence with Beijing – one that should work for decades to come. Soon, commentators will have to change tack and stop seeing visits to Beijing in the light of Russia’s ties with Eu-rope and the US. Rather, they will consider whether Rus-sia can use its contacts in the west to strengthen its posi-tion in China.

Fyodor Lukyanov is chief editor of the magazine Russia in Global Affairs.

07MOST READ RUSSIA NOW WWW.RBTH.RUSECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA DISTRIBUTED WITH THE DAILY TELEGRAPH TUESDAY_OCTOBER 25_2011

Moscow festivals: what’s on throughout the autumnhttp://rbth.ru/13470 Cityscape

Architecture Despite postwar deprivation, no expense was spared in the construction of Moscow’s grand skyscrapers

TINO KYUNTSELSPECIAL TO RUSSIA NOW

ALENA TVERITINARUSSIA NOW

In the grey days of the Sovi-et era, workers raised in the spirit of atheism needed a lit-tle inspiration from time to time. And, while they had the luxurious pioneer camp Artek in the Crimea, the grand Ex-hibition of Economic Achieve-ments in Moscow, and the lav-ishly decorated Moscow Metro to uplift their spirits, the com-munist paradise on Earth was yet to arrive. Soon after the end of the Sec-ond World War, in de� ance of all doubters, a grandiose new architectural project was launched. Joseph Stalin, “the father and friend of all Sovi-et architects”, as he was called at the All-Union Congress in 1946, undertook a colossal construction project designed to convince the Soviet peo-ple, and the whole world, of the victorious Soviet power’s increased self-awareness. In early 1947, the Council of Ministers adopted a resolu-tion for the construction of eight skyscrapers (one of which was never built). At 1pm on September 7 of the same year, during the celebra-tion of Moscow’s 800th anni-versary, the � rst stone of each skyscraper was laid in a spe-cial ceremony.

A vista of triumphThe � rst skyscraper was com-pleted in 1949, and all seven were completed within 10 years. Later known as the Seven Sisters, these buildings became: Moscow State Uni-versity on Sparrow Hills; two government buildings, includ-ing the Ministry of Foreign Affairs; two residential build-ings; and two hotels, the Ukraina and the Leningrad.In the postwar period, these symbols of a new era, shin-ing with magni� cence, seemed like something fantastic. Their architectural slogan was “We can!” – trumpeted from a city whose residents, faint from hunger, lived in cramped com-munal apartments.Supervision of the skyscrap-ers’ construction was initial-ly entrusted to the notorious KGB chief Lavrenty Beria (who was also in charge of creating the Soviet atomic bomb project and was exe-cuted in 1953). Beria was ru-moured to have installed spy-ing devices in some of the rooms.The actual construction of the Sisters was carried out by thousands of prisoners from the Gulag, as well as German prisoners of war. For each building, a different technique was used to stabilise the ground under the founda-tions.The costs incurred were of secondary importance. Some 2.6 billion Soviet roubles were spent on Moscow State University alone – which has

beautiful marble staircases and was the tallest building in Europe until the exhibi-tion centre at Frankfurt-on-Main was completed in 1990. In today’s money that would add up to around £415 mil-lion – more than the 2 bil-lion roubles set aside to re-build war-ravaged Stalingrad over a period of � ve years. Roughly the same amount was spent in total on the con-struction of the other six buildings.These monumental skyscrap-ers surround the centre of the city like a fortress wall, and themselves resemble fortress-es. All follow a similar style: a dominating central tower that narrows in stages to the top, � anked in a more or less strict order by wings. How-ever, the structure of each building differs, as does the architectural detail and the lavish decorations of their towers, statues and bas-re-liefs. In� uences range from Renaissance and baroque to Russian church architecture and Gothic. The architects tried to guess what would appeal to Stalin, who was said to be fond of the Gothic style. However, they didn’t always manage to please him: the Ministry of Foreign Affairs building was originally designed without a spire, but the dictator in-sisted on having one. So a spe-cial lightweight spire, made in the same colour as the sky-scraper, had to be perched on top with supports descend-ing � ve � oors. After Stalin’s death in 1953, the architects asked the new First Secretary, Nikita Khrushchev, for per-mission to undo this Stalin-ist act of despotism. But

Stalin’s statuesque ‘Sisters’ still stand tall on the Moscow skylineBuilt by Stalin as symbols of victory and a new era of Soviet power, the colossal Seven Sisters still impress amid newer high-rises.

The Hotel Ukraina (or the Radisson Royal Hotel as it is now called) has always been distinct from the other Seven Sisters. Unlike the closed ministries and resi-dential buildings, this hotel allows anyone to stroll in and admire its stunning pano-ramas – which is what leg-endary cosmonaut Yuri Gagarin did back in 1961. The Ukraina is also one of the oldest and most celebrat-ed of the Seven Sisters. When it opened in 1957, it was the largest hotel not only in the Palatial: Stalinist decor adorns the Hotel Ukraina

The Hotel Ukraina, once the largest hotel in Europe, has been restored to its former glory – with a little modern style and comfort added.

Grand hotel: the iconic Ukraina is reborn as an ‘oasis of elegant luxury’

USSR, but in all of Europe; to this day it is Moscow’s tallest hotel. The observation deck that once occupied the 29th � oor has gone, but the views can still be enjoyed from the fashionable restau-rants at the top. The spectacle begins in the main lobby, where you get a bird’s-eye view of Moscow – from the golden domes of the Kremlin churches to the boats on the Moscow River. But there are no glass tow-ers on the horizon, as this is a view of Moscow in 1977, immortalised at the time in a huge diorama. Measuring 16m x 9.5m x 6m (52ft x 31ft x 20ft), the piece was creat-ed for a national exhibition in New York City. At the time, US astronaut Neil Arm-strong wanted to buy it, but

in those days Soviet Moscow was not for sale. In 2007, it was bought at auction by the Ukraina’s new owners, the Rezidor Hotel Group.After a major, three-year renovation, the hotel has

been transformed into an oasis of elegant luxury. Its layout and interiors have been changed – it now has all the elements of a mod-ern � ve-star hotel, such as boutiques selling luxury brands – but the old trim-mings, made of natural and

It now has all the elements of a five-star hotel, but the old trimmings still remain

The Seven Sisters compared: height and fl oors

Architectural legacy: three of the Seven Sis-ters, the Hotel Ukraina (right), the Ministry of Foreign Affairs (left of the hotel), and the building on Kudrinskaya Square (far left)

metres: the height above ground of the pinnacle of the spire on the Moscow State University building – the tallest of the Seven Sisters by 34m.

pounds: the average monthly rent paid for a standard three-bedroom apartment in the Kotelnicheskaya Embankment residential building.

people (approx) from all over the USSR who participated in the construction of the Hotel Ukraina alone. Even today, it is the tallest hotel in Moscow.

240 2,500 9,000THE NUMBERS

" The Seven Sisters were the first large-scale construction in Europe

after the war, and the first to bring skyscrapers to Europe. They were seen as a symbol of a country reborn, and returned a sense of scale to a city that had been hit badly by the war and by the destruction of the old city under Stalin. Recently there have been calls by Rus-sian and German preservation-ists for the buildings to be put on the World Heritage List."

QUOTE

Natalya DushkinaPROFESSOR AT THE MOSCOW

ARCHITECTURAL INSTITUTE

Sample the Seven SistersMoscow tourists keen to experience a Stalin-era, Gothic, high-rise hotel with panoramic views can book a room in either the Hotel Leningrad-skaya or the Ukraina (now respectively owned by international groups Hilton and Radisson). With their five-star ratings, they offer luxuries such as swimming pools, health clubs and international cuisine, while still recalling the Soviet era thanks to their opulent decor. Rooms cost around $300 for the Hilton and $500 for the Ukraina (now called the Radisson Royal). For a lower price, try the heat of summer in July and August or the New Year holidays.

traditional materials, such as marble, Karelian birch and onyx, still remain. The spirit of the Stalinist era is unobtrusive yet palpable everywhere: in the lobby’s massive crystal chandeliers and the expensive curtains draping the tall windows; in the green glass lampshades and the hush of the library, where volumes of Marx and Engels are housed. On the newly-restored ceil-ing is a spectacular painting entitled: “Celebration of La-bour and the Harvest in Hos-pitable Ukraine”. “Our Japanese guests are especially thrilled by this,” the receptionist remarks. “One tourist even lay down on the � oor to get a better shot of it.” Some 1,200 paintings by So-viet artists adorn the walls of the hotel, the most famous by Polenov and Deineka. “Many of our foreign guests ask to buy these paintings,” says Natalia Kalinina, who has worked with the Ukrai-na’s management for more than 30 years. “But they are the pride of the hotel and are not for sale. “One day, in 1991, we re-ceived a letter from England

saying: ‘I stayed at your hotel in March 1988 and remem-ber a beautiful painting showing children playing in the snow… I would very much like to buy it from you. If you cannot sell it to me, then I would be grateful for a photograph of it.’” Natalia had the painting photographed and sent it to the English admirer. In reply, she received a letter of thanks and a family portrait taken in front of a canvas – a copy of the painting. Part of the hotel’s wings are given over to private residen-tial apartments, occupying 11 storeys. Like those of the other Seven Sisters residen-tial buildings, these apart-ments have housed plenty of Russian celebrities: singers, writers, actors and scientists. In the late Fifties, an ice rink was installed in the inner courtyard of the hotel, where the future Olympic ice-skat-ing champion Ludmila Pa-khomova practised. The Ukraina’s Olympic con-nection lives on: the hotel now boasts a 50m swimming pool and a fitness centre where coaching in different sports is given by former Ol-ympic champions.

Khrushchev refused, wanting the spire on the Ministry to remain as a “monument to Stalin’s stupidity”.Contemporaries were imme-diately struck by the resem-blance of these Stalinist-Gothic monuments to certain American precursors, such as the Manhattan Municipal Building, which was complet-ed in 1914. Given this resem-blance, it was hard to under-stand the ideological statement made by the build-ings. The dialectical explana-tion was that capitalist tem-ples of trade had been studied in detail and used as a foundation, the objective being to give them a com-pletely new meaning. Historian Karl Schlögel wrote in his book Moscow: “The new skyscrapers recreated the sky-line, giving it a new vertical emphasis once held by the nu-merous churches and bell towers of the city so recently destroyed.”

The end of opulence Stalin’s death put an end to the principle that “the eye should delight” as quickly as the “father and friend of all architects” had disposed of the Soviet avant-garde in the Thirties. Khrushchev declared war on Stalinist extremes in city planning. Now, everything would be sacri� ced to func-tional understatement. Rapid construction of mass housing began, as a result of which many city dwellers received separate apartments for the � rst time in their lives. In the Russian mind, howev-er, Stalinist skyscrapers still equal quality, while Khrush-chev’s matchbox-size apart-ments equal quantity.

Construction of the Seven Sis-ters was completed under Khrushchev. But the eighth skyscraper – the one that was intended to be the most im-pressive of all, located next to Red Square and soaring up to 275 meters (900ft) – never materialised. Instead, on the foundation of the would-be Zaryadye Administrative Building, the Rossiya Hotel was built, the largest hotel in Europe, which was demol-ished in 2006.Fate was not kind to Stalin’s planned Palace of the Sovi-ets, either, which was to be in the classical “Stalinist Em-pire” architectural style. Its 420m tower was to be crowned with a 100m statue of Lenin, but construction was sus-pended during the war. When Khrushchev learnt how much it would cost to complete, he supposedly said: “Better build chemical combines [chemical/radioactive plants] instead.” But in place of the palace, an enormous outdoor heated swimming pool was built. In the Nineties, the pool was re-placed by the Cathedral of Christ the Saviour (the orig-inal cathedral having been pulled down in 1931).Today, the Seven Sisters have lost some of their old lustre. In the two residential build-ings, the elevators break down from time to time, while the residents – members of the intelligentsia, pilots and cos-monauts – must accept that their new neighbours are hardly high society any more. Nevertheless, the Seven Sis-ters’ statuesque presence across the city provides a grandiose aura and serves as a constant reminder of an era gone by.

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08 MOST READRUSSIA NOW WWW.RBTH.RUSECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA DISTRIBUTED WITH THE DAILY TELEGRAPH TUESDAY_OCTOBER 25_2011Feature Kharcho: the Georgian spicy meat-and-tomato soup

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Cinema The Fifth Russian Film Festival brings to London a collection of contemporary pieces reflecting a country undergoing a seismic shift

This year’s Russian Film Festival is highlighted by stories that reflect the social and political consequences of three turbulent decades.

The latest generation of con-temporary Russian � lms con-tinues to look back on the realities of the country’s near past. Some of the most out-standing new releases will be a big draw at the Fifth Rus-sian Film Festival in London, which starts on November 4. Below we preview three of the best: Innocent Saturday, a prize-winner at the Brus-sels Film Festival, which cap-tures Soviet Russia in the Eighties; the long awaited Generation P, which is based in the turbulent Nineties; and Elena, a critical view of the replete 2000s, which won a special prize at the Cannes Film Festival.

Innocent SaturdayDir: Aleksandr MindadzeThe tragic accident at the Chernobyl nuclear power station 25 years ago is cen-tral to this � lm. The action takes place in the Ukrainian city of Pripyat, starting on April 26, 1986 – the day the explosions occurred.The � lm’s plot is by no means “Hollywood” in style: Valera, a young member of Komso-mol and a typical adminis-trative careerist, � nds him-self unwittingly privy to a state secret: he discovers the truth about the Chernobyl incident at the very moment when the authorities start trying to cover up what’s happened. At � rst he tries to � ee, taking his girlfriend with him, and then, yielding to a whirlwind of events that don’t seem comparable in signi� cance with the acci-dent, he � nds himself at the epicentre of the tragedy.Innocent Saturday is partic-ularly notable for its strong performances, unusual cam-era work and a con� dent di-rectorial touch. Mindadze presents a vivid re� ection of everyday Soviet life at the time, and attempts to cap-ture the atmosphere in which a sense of the forthcoming collapse of the system was already in the air.“Strictly speaking, the � lm

is not about Chernobyl,” Min-dadze tells Rossiyskaya Gazeta. “For me, the accident is a basis for looking at how people behave. Instead of running away, a person in an extreme situation stays where he is for some reason, and the details of life – which he paid no attention to before – suddenly become vivid and hold him back.”

Generation P Dir: Victor GinzburgThe title of the � lm is a play on the phrase “Pepsi gener-ation” – the young people

who lived through the col-lapse of the Soviet Union and the advent of capitalism. Based on Viktor Pelevin’s sen-sational novel Generation P – which became an instant cult hit when published in 1999 – the � lm remains very true to the book. The main hero, Vavilen Tatarsky, is one of the first people in post-Soviet Russia to take up the profession of copywriting. He writes snappy advertising slogans, deals with crooked advertisers and gets caught up in politics – all the while hovering between the real

world and that of his narcotic fantasies. Victor Ginzburg has done well to capture Pelevin’s writing style, which Alexan-der Genis describes as bring-ing to life “the places where different realities collide. Where they meet, vivid ar-tistic effects emerge – one picture of the world super-imposed on the other creates a third picture, different from the � rst two.” Scenes shot in the style of an advert are al-ternated with television news footage from the Nineties: we see Yeltsin conducting an or-chestra, and tanks � ring on the White House. The � lm bene� ts from the in-volvement of some of Rus-sia’s leading actors, as well as high-pro� le media � gures – an achievement for Ginz-burg, who was not particu-larly well known before the � lm. Although he has spent most of his life in Los Ange-les, he says this has not al-ienated him from the reali-ties of his home country. “I feel American in Russia, and Russian in America,” he ad-

mitted in an interview with the BBC’s Russian Service. “In the � lm this con� ict of values – the old Soviet val-ues and the new western ones – was something I felt close to and could understand.”

Elena Dir: Andrei ZvyagintsevThis story, set post-2000, il-lustrates the choices open to ordinary people in a time when moral principles have become devalued. Helmed by one of Russia’s most successful directors, Elena won a special prize at the Cannes Film Festival and has been warmly received by the general public – a rarity for auteur cinema. Elena and Vladimir’s mar-riage, although a classic mis-match, works for both of them. He is a rich, ageing businessman who suffers ill health; she is a middle-aged woman of humble origins, his former nurse. Elena is caught between the lives of her hus-band and her son, an idler who does nothing to support his family and leeches the

money his mother takes from her husband. Two worlds, two contrasting figures from modern Russian society, and Elena becomes the bridge be-tween them: on one side a disagreeable but successful individual, and on the other a scrounging dependant. “I am sure that this story will be understood not only in Russia but also in other societies,” said Zvyagintsev

in an inteview with Russian Reporter. “Of course, the script we wrote stems from the experience of living in our country, whereby the paternalistic Russian state has engendered scrounging with its distorted under-standing of consumption, and the attitude that causes you not to work but instead to do nothing.”

A viewfinder on the politics of change

Victor Ginsburg’s Generation P focuses on the so-called ‘Pepsi generation’ – young people living through the dramatic change from communism to capitalism

ANASTASIA DENISOVASPECIAL TO RUSSIA NOW

5th Russian Film Festival, London

The main programme of the Fifth Russian Film Festival, organised by Academia Rossica, will include 10 of

the best Russian feature films of the year. Made by a new generation of Russian film directors, all have received recognition at prestigious national and international festivals.

FULL PROGRAMME AT: www.russianfilmfestival.co.uk

Joseph Brodsky’s 1970 poem Gorbunov and Gorchakov, which is based on the poet’s experience of being placed in a Soviet psychiatric hos-pital, has been reimagined as an art-house movie, Conver-sation in the Face of Silence, which opened in London last week.Brodsky’s poetry was de-nounced by a Leningrad newspaper as anti-Soviet in 1962, and he was twice put in a psychiatric hospital be-fore being arrested. He even-tually emigrated from Rus-sia in 1972 and did not return before his death in 1996.The subtle, philosophical poem, which is built entire-ly on direct speech, captured the heart of the � lm’s lead actor, Yuri Korenev. He learned the words over a pe-riod of seven years, before suggesting that producer Vladimir Makarikhin make it into a � lm. “He got so deep-ly into the roles that when he came to me one day and said, ‘Let’s shoot it,’ I realised that I absolutely had to do it,” says Makarikhin. The idea then emerged of making one actor (Korenev) play both the Gorbunov and Gorchakov characters at the same time. “Despite being written more than 40 years ago, it’s a very contemporary work, because the sufferings of the soul are timeless,” Makarikhin adds. The film’s co-producer, Alexandra Ravenskikh, ex-plains the themes behind the screen adaptation. “It is an attempt to combine three unique worlds: poetry, the stage and cinema – worlds

A new film based on Joseph Brodsky’s philosophical poem Gorbunov and Gorchakov has been screened in London.

with the capacity for confes-sion, preaching and teach-ing,” she says. “This poetic mystery about the soul of a contemporary person speaks about the most important things: about good and evil, about truth and lies, about beauty and ugliness.It’s about how to keep your despair in check in the face of cruelty and betrayal.” It was, of course, a very bold undertaking. “To make a po-etic work into a � lm is not easy in itself, but to make the metaphors built into Brodsky’s text is a very dif-ficult thing,” Makarikhin admits.Pavel Markelov’s soundtrack is a core element in the � lm. “The symphonic music inte-grates with the � lm in a very organic way,” says Maka-rikhin. “The themes that sud-denly emerged in Pavel Mar-kelov’s music fitted with Brodsky’s poetry very well.”The � lm will air soon on Rus-sian central television, but the British public had one of the � rst opportunities to see it last week. The screening, at Pushkin House in London, where Brodsky is remem-bered and honoured, was or-ganised by Valentina Polukhi-na, one of Brodsky’s closest friends and a researcher into his work.

A tale of ‘good and evil, truth and lies’

Denounced: Brodsky’s views led to his imprisonment

IRINA SHULGASPECIAL TO RUSSIA NOW

The story illustrates the choices open to people when moral principles have become devalued

In a secluded two-storey house on the edge of a Mos-cow park, a young man with penetrating eyes, dressed in a leather coat, is addressing an audience of about 100 people, setting out a plan to take over the world. Outside, masked people in camou� age uniforms guard the entrance of the house.No, this is not a secret meet-ing of some clandestine or-ganisation seeking to rule the planet. It is a meeting of fans of the post-apocalyptic saga Metro 2033 with it's creator Dmitry Glukhovsky and British writer Grant McMas-

Read Russia A new publishing project encourages science-fiction enthusiasts around the world to set out their impressions of a post-apocalyptic future

The ‘Universe of Metro 2033’ project has become a global phenomenon, and new writers are now jumping at the chance to get on board.

ter who has recently teamed up with him.Nearly 10 years ago, the then 22-year-old Glukhovsky wrote a story about the sur-vivors of a nuclear disaster, set 20 years after the event. He sent the manuscript to a publishing house, which re-sponded in a rather unen-thusiastic manner, particu-larly disliking the fact that the main character dies at the end, leaving no hope for a sequel. Despite the rejection, Glukhovsky posted all 13 chapters of his novel online and got on with his career as a journalist. And, little by lit-tle, the Metro 2033 website gained popularity. Encour-aged by this positive response, Glukhovsky returned to the script and considerably re-worked it. When complete, he offered it to the publisher

again – this time backed by thousands of potential read-ers. The result exceeded all expectations: Metro 2033 has been reprinted several times in runs exceeding 100,000.The readers asked for more Metro 2033 adventures, and they soon got them. “I made my name thanks to the inter-net,” says Glukhovsky. “All my novels are available online, on

their own websites, accom-panied by soundtracks and pictures.”But the appetite for post-apocalyptic adventures seemed insatiable. So Glukhovsky – who by this time was a popular radio presenter and journalist as well as an author – launched “Universe of Metro 2033”, a project to encourage other

Future shocks energise new generation of writers

Going underground: Sci-fi writer Dmitry Glukhovsky in the Moscow Metro

ALENA TVERITINARUSSIA NOW

young writers to come on board. The idea is that the authors write their own novels – all with the post-apocalyptic theme and the action set un-derground – and Glukhovsky chooses the best to be pub-lished by one of the leading Russian publishing houses. “All the novels complement one another”, explains. “There

are no tough restrictions for the authors; everyone contrib-utes something new.” This is where British writer Grant McMaster came in. “Last year McMaster got in touch with me on Facebook, and now our project has Britannia 2033, its � rst book [published last month] writ-ten by a foreign author”, says Glukhovsky.

Find more about Russian fiction atwww.rbth.ru

Britannia 2033: a survivor’s storyThe first book by British writ-er Grant McMaster, who joined the Universe of Metro 2033 project last year, begins in the underground of Glasgow, where Euan lives with his fam-ily after the old world has been destroyed by nuclear warfare. When ‘slavers’ capture Euan’s

wife and children, he sets off on a dangerous mission south to save them. Britannia 2033 is published in Russian, and is due to come out in English soon. Also look out for The Roots of Heaven by Italian Tullio Avoledo, which is set in Rome and Venice.

“I read Metro 2033 and thought that a book set in the London Underground would de� nitely work,” Mc-Master says. “Now I have stories for another two books set in Britain.”Glukhovsky’s novels have been translated into 35 lan-guages. Now the books of some of the project’s other au-thors have also been pub-

lished abroad. It’s an endeav-our that attracts attention from all over the world, and now features novels by con-tributors from the US, India, Cuba, Italy, and Japan. “It is our ambition to conquer the entire world,” Glukhovsky says with a smile. Although he claims not to want his project to become “purely commercial”, with such an international audi-ence it seems odd not to cap-italise on it – already there are Universe of Metro 2033 computer and board games, and more might follow. Such a huge interest in the post-apocalyptic world could be worrying on one level, inspiring fears about the fu-ture. But Glukhovsky has no such concerns. He is now working on a new book, which he describes as “a large, futuristic science � ction novel describing mankind in some 100-150 years’ time – without any apocalyptic or other disasters”.

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Can the heroes of the Khimki forest preserve the Black Sea coastline?

WHEN: NOVEMBER 4–13WHERE: APOLLO PICCA-DILLY CIRCUS, 19 REGENT STREET, LONDON, SW1Y 4LR

GENERATION PDirector: Victor GinzburgOn screen: 4, 8 November

INDIFFERENCEDirector: Oleg FlyangoltsOn screen: 5, 11 November

INNOCENT SATURDAYDirector: Aleksandr MindadzeOn screen: 6, 10 November

GROMOZEKADirector: Vladimir KottOn screen: 6, 9 November

ELENADirector: Andrei ZvyagintsevOn screen: 12, 13 November

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