april 2011 Russia Now (Daily Telegraph)

niyaz karim

The Arab world in turmoil

The presidential aide talks economic strategy

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Arkady Dvorkovich: view from the top

P.04

Whisky makers in high spirits

nikolay korolev

Reality checks for hasty architects of revolution P.06

Wee dram becomes a torrent on Russian market P.05

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Mergers & Acquisitions Russian shareholders ebullient in struggle against $16bn share swap

BP-Rosneft: oil on the rocks As BP and Rosneft cling to hopes of saving their planned alliance, can a onemonth extension to the deal end the stalemate with AAR?

Putin at the signing of the co-operation agreement, nor the support of President Dmitry Medvedev and the chairmanship (until recently) of the“all-powerful”deputy prime minister Igor Sechin on the Rosneft board could save the deal from the claims of the Russian shareholders. In February, the London High Court imposed an injunction on the deal, and in April the Londonbased Stockholm court extended the ban.

The optimal solution to the conflict was allowed to slip away, say observers. “At the very beginning of the confrontation, there was hope that the sides would settle out of court,” said Mr Nesterov.

“TNK-BP’s Russian shareholders would receive some form of compensation — money or assets — in exchange for withdrawing their objections to the deal.”

AAR has long wanted to enter foreign markets, but the variants proposed by BP (including Arctic exploration) did not suit the consortium.

TNK-BP can now either buy back the Russian partners’ package in TNK-BP – for money or shares – or sell theirs. Theoretically BP could find $40bn: at the end of last year it had $18.5bn on its accounts, while Rosneft had $4.1bn, said Boris Denisov, an analyst at the Bank of Moscow. But it now has to sell assets to pay compensation for last year’s oil spill in the Mexican Gulf.

Shareholders are unlikely to appreciate such sacrifices. “We are not planning to offer large sums or significant stock participation [to AAR in BP],”Mr Dudley said in an attempt to calm BP’s British shareholders.

Olga Senina

reuters/vostock-photo

special to RN

Executive decision: BP’s Robert Dudley told shareholders the company would not offer ‘large sums’ to AAR

– some reports say $70bn – though on the Russian stock exchange the whole of TNKBP is worth only 1.3 trillion roubles ($46.4bn). Officials at Rosneft are incensed by the demands, which they slammed as “market speculation”.

Analysts say BP stands to lose the most if the issue is not resolved: Russia accounts for a quarter of the company’s reserves, so it must remain there to avoid being swallowed by global competitors.

Meanwhile, there are signs that Rosneft is keeping its options open in the quest to form a strategic alliance, and realise its ambition of becoming one of the world’s top five oil and gas concerns. Speaking on condition of anonymity, sources close to the Rosneft board of directors said another foreign company might be found to replace BP. But if anyone is keen to explore Arctic oil deposits as BP aims to do, “They are not banging

down Rosneft’s doors to swap shares,” said Valery Nesterov, an analyst at Troika-Dialog.

The BP-Rosneft alliance was to be effected in two stages.

By April 14, the companies were due to have finalised the share swap of 9.53pc of Rosneft and 5pc of BP. The second stage envisages the joint exploration of three areas on Russia’s Arctic shelf.

Cue AAR, which, fronted by such formidable figures as Alfa Group’s tycoon chairman

Russia-Nato Berlin talks address Libya action and missile wrangles

As Nato members met to rally forces in the Libya operations, Russia kept up pressure on the alliance to adhere to its UN mandate.

Old concerns about missile defences were close behind.

Yevgeny shestakov

special to Russia now

At a Berlin meeting of Nato foreign ministers, Russia reiterated its stance that the western alliance’s Libya campaign has overstepped its UN mandate through use of excessive force. It also pressed home concerns in the ongoing issue of missile defences in Europe.

“We consider that certain actions by Nato in Libya do not correspond to its mandate, and we would like to investigate this,” Sergey Lavrov, the Russian foreign minister, said after Friday’s talks.

Participating in the framework of the Russia-Nato Council, Mr Lavrov added that he had requested that the Nato leadership strictly observes the positions on Libya adopted by resolution 1973 of the UN Security Council.

Russia saw the Nato action

as a real-life litmus test of that organisation’s new strategic conception and its readiness not to overstep its authority as defined by the UN, Mr Lavrov told ministers from Nato’s 28 member states and leaders of allied nations.

Russia, which has power to veto UN resolutions, abstained from last month’s vote that authorised the airstrikes by Nato.

As the alliance sought in Berlin to find extra aircraft for the campaign against Colonel Gaddafi’s loyalists, Mr Lavrov stressed that “using excessive military force will lead to additional casualties among civilians”.However, he went on,“Russia does not intend to act as watchdog when it comes to respecting Security Council resolutions on Libya.”

The Russian delegation expressed satisfaction that the first report by Nato General Secretary Anders Fogh Rasmussen on the implementation of Libya-related resolutions had been delivered to the UN Security Council.

Regarding the planned development of a European anti-ballistic missile defence

reuters/vostock-photo

Play by the rules, says Lavrov

Libyan litmus test: Russia is following military developments in North Africa closely

shield, a major sticking point in relations with Nato, Mr Lavrov underscored Moscow’s basic position: all participants in the project must agree on criteria guaranteeing that the system will not be directed against any of them. Russia also wants guarantees that Nato’s military planning will not threaten its interests.

The meeting in Berlin also failed to allay Russian apprehensions about Nato

plans to adopt a “stage-bystage adaptive approach” in developing a European shield. In the opinion of Russian military experts, the anticipated appearance of missile interceptors near Russia’s borders within 8 to 10 years under current plans would create potential risks for its intercontinental missiles.

It remains unclear to what extent the alliance and the US are willing to involve non-Nato members like Russia in work on the system.

After the Nato-Russia Council meeting in Berlin, Mr Lavrov said talks about the possibility of Russia joining the European system of missile defence are being conducted not only with the alliance, but also in Washington.

The ministers in Berlin affirmed renewed efforts to fight terrorism. Actively being promoted is a joint RussiaNato programme to develop remote identification of explosives carried by suicide bombers. For Afghanistan, the sides agreed to create a special helicopter fund to help raise the qualifications of Afghan personnel who service flight equipment.

Mikhail Fridman, successfully blocked the way.

While being a likely source of boardroom palpitations, the share swap saga debunks a widespread notion about doing big business in Russia.

The history of the planned alliance vividly illustrates that the influence of administrative resources in private business in Russia is greatly exaggerated.

Neither the presence of Prime Minister Vladimir

Migrants Russians in Britain

Destination: ‘Londongrad’ Forget the famous Cold War warning, “the Russians are coming”: they’re already here – and making a big impact on British society. olga dmitrieva AND yadviga yuferova russia now

From several hundred Russians – exotic birds inhabiting these lands in the Seventies – to several hundred thousand at the start of the new century, this is the speed at which the UK is being “Russified”.

It’s no coincidence that London has earned the nickname “Londongrad”: as the famous British translator of Chekhov, Professor Donald Rayfield, noted humorously, it has become impossible to speak Russian peacefully on the London Underground, as a native Russian speaker will undoubtedly be found in the same carriage.

Russians are everywhere, disguised as boutique salespeople, doctors, waitresses, estate agents, schoolteachers and university professors: Pyotr Reznikov has held a department chair for many years at

reuters/vostock-photo

A last-minute reprieve granted by the Stockholm Arbitration Court to BP in its struggle to push through a $16bn share swap with Russia’s Rosneft state oil corporation has dramatically fired up the saga of the year’s biggest oil deal.

With last Thursday’s extension – to May 16 – of the deadline to resolve the dispute with Russian partners in the TNKBP joint oil venture, the pressure is on to find a solution.

Those partners, a consortium of Alfa, Access and the Renova Group (AAR), successfully argued that the share swap breaches the TNK-BP shareholder agreement. And with AAR effectively now having these giants over an oil barrel, Rosneft president Eduard Khudainatov had little more to say after the deadline extension, other than that he was “hopeful of a quick resolution to the arguments”.

BP is now trying to buy back AAR’s share in TNK-BP, and, according to insiders, the sums floated are astronomical.

“Together with Rosneft we made a fair offer,” BP’s CEO Robert Dudley said at the company’s annual general meeting in London last week.

Sources close to BP say that the sum offered for 50pc of TNK-BP was $27bn. Sources close to AAR called this offer – in terms of both price and assets – “not serious”, and raised the stakes. At first the private Russian owners were ready to sell their share to BP for $30bn, then for $35bn; now they are talking about $40bn

News in Brief

Billionaire club hits 100-member mark The number of Russia’s billionaires surged by more than 50pc over the last 12 months to reach a total of 101.

A year ago there were 62 billionaires in Russia and only 32 in 2009, Vedomosti reports from a new Forbes Russia magazine survey.

As before, the number one spot fell to Vladimir Lisin, owner of Novolipetsk Steel, who was valued at $24bn. He was followed

by Severstal chairman Alexei Mordashov at $18.5bn and Onexim owner Mikhail Prokhorov at $18bn.

Wealth is highly concentrated even in the top 10, who together account for around 40pc of the total net worth of the top 100.

Uzbek-born mining and media mogul Alisher Usmanov posted the greatest absolute wealth increase, rising from $10.5bn to $17.7bn owing to greater asset values.

Rock stars appear for space heroes Queen guitarist Brian May has joined with Germany’s etherial electronic music group Tangerine Dream to record two songs dedicated to Soviet cosmonauts: one to Yuri Gagarin, the first man in space; and another to Alexei Leonov, the first man to carry out a space walk.

The songs will be debuted at the Starmus science and music festival being held in Tenerife and La Palma, Spain, in June to mark Gagarin’s flight on April 12, 1961.

Search begins for new musical talent

www.tvkultura.ru

The 12th Annual Nutcracker International Television Contest for Young Musicians, scheduled to take place at the beginning of November, has launched its application process. Sponsored by state-controlled TV network Russia K, the event brings together talented classical musicians under the age of 14 from around the globe to compete against one another. The jury includes world-renowned virtuosi such as Vladimir Spivakov and Yuri Bashmet.

The winners perform before a live audience with the Tchaikovsky Symphony Orchestra in Moscow, conducted by Vladimir Fedoseyev. After the contest they also have the opportunity to continue their training with jury members after the contest.

See the Nutcracker website at www.tvkultura.ru.

In this issue Big hand: Roman Abramovich is a familiar face in Britain

Eton College. Let’s not, however, get into window dressing. There are also stains spilled by our countrymen on the starched tablecloth of their new British homeland.

There have been scandals involving disgraced oligarchs, the gloomy“poisonous”years of the Litvinenko polonium scare, and rumours about the dirty billions held by the filthy-rich Russians who have settled in Albion.

So why have all these people come to Britain? What good have they brought to British society? In what way continued on PAGE 7

feature

alamy/photas

Chernobyl

Life in the danger zone – now and then Turn to page 3

Politics & Society

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Khodorkovsky: from oil tycoon to imprisoned muse http://rbth.ru/12632

Legislation Entrepreneurs lead the fight against institutionalised corruption

Private business rises against the Goliaths of graft When entrepreneur Yana Yakovleva resisted police extortion attempts, she went to jail for seven months on principal. Now free again, she is a champion of business against corruption.

to prisoners has not changed since the Thirties.” Her case drew the attention of human rights activists in and outside of Russia, as well as that of President Dmitry Mevedev.

According to Ms Yakovleva, the police had tried to extort from her on the basis that the industrial solvent her company manufactured could be considered a controlled substance.

The charges were dropped when a court removed that particular regulation. She filed a complaint, but the police denied any wrongdoing.

VLADIMIR RUVINSKY RUSSIA NOW

Fighting back

Five years later, Ms Yakovleva is probably the most prominent business activist working against corruption.

Displaying a drive that comes of having been on the receiving end, she co-operates with start-up businesses and also works with the Russian government. There are tens of thousands of people in pretrial detention charged with white-collar crimes, activists say,

of leaving Russia herself,Yana Yakovleva stuck to her guns and created Business Solidarity, an organisation that supports entrepreneurs against illegal actions of the authorities and law enforcement agencies.

Recently, she was also appointed to chair an anti-corruption centre pledged to assist entrepreneurs in the fight against bureaucratic raids.

The centre has begun working with Delovaya Rossiya (Business Russia), the leading public association of nonoil and gas companies.

“This is a union of two forces – the authorities and business,” said Boris Titov, who co-chairs the body.

Theft of a company

One of the first cases the centre took on involved Galina andYevgeny Konovalov, husband and wife entrepreneurs from the southern city of Krasnodar, whose company was wrested from them by local officials. “In 2008, we learned that the company’s owner had been mysteriously replaced. When we went to court, my husband was arrested on fabricated charges,” Ms Konovalova says.

Lawyers said the case was hopeless, but this year the couple won two major victories: in February, one court ruled that there had been several breaches in the case againstYevgeny, while another returned the company to the Konovalovs. The case againstYevgeny, however, has not been closed, and company property was sold during the court proceedings. “This is a typical case of raiding, and we are trying to help them recover their property,” Ms Yakovleva says.

Delovaya Rossiya believes corruption has now reached epidemic proportions, with some 70,000 enterprises across Russia being targeted by similar raider attacks.“Up to 10pc of a business’s expenses go towards meeting the

PHOTOXPRESS

Enough’s enough, say entrepreneurs after two decades of arbitrary harassment from corrupt officials

ONLINE

Enforcing new legislation

Further amendments to the criminal procedure code took effect last month, softening penalties for economic crimes which used to provide ideal leverage for corrupt officials.

State duma deputy Alexei Nazarov, deputy chairman of the parliamentary Legislation Committee, says the Supreme Court needs to regulate lawenforcement practices in the court system in particular: “The amendments create the prerequisites for improving the investment climate, but more work is needed.”

In response to his recent inquiry, the Interior Ministry said the number of criminal cases opened on economic charges dropped by 35pc in 2010.The Kremlin is now preparing the third phase of criminal legislation liberalisation: it is expected that the majority of economic crimes will be made punishable by a fine instead of prison. But few of these measures may work without efforts from below to connect laws and the reality of doing business.

These days, Yana Yakovleva maintains a diverse set of confidants – from oil executives to Lyudmila Alexeyeva, a Soviet-era dissident who heads civil rights organisation the Moscow Helsinki Group.

“I see my calling in using my own experience to try to help people and change the situation,” says Ms Yakovleva.

“Before my arrest I didn’t think that business should have societal obligations. But it shouldn’t keep silent – rather work to improve its own environment.”

People power, not herd mentality, is key to civil reforms The Kremlin’s Human Rights Council is due to submit a point-by-point programme for building civil society to President Dmitry Medvedev.

VYACHESLAV KOZLOV MOSCOVSKYE NOVOSTI

What sort of document are you going to send to the president?

It should be a massive programme for creating the right conditions for development of a civil society and human rights safeguards. The measures should help create the outlook required for the country’s modernisation – which is impossible without the modernisation of public consciousness, social relations and behaviour patterns.

The [pre-1991] totalitarian state produced certain types of behaviour reflecting people’s dependence on government. Can a person with such a mindset become a moderniser? Of course not, because he assumes that his fate is decided by the boss and is not in his own hands. The Soviet system collapsed 20 years ago, but these stereotypes did not go away.

What recommendations will you make?

It is important for people to have access to genuine justice; to know the truth about what is happening around them; and to feel themselves as free. An awareness of justice, truth and freedom is essential, because sometimes a person simply does not understand that he is free, has no sense of this and is unable to escape from the labyrinth of unwritten taboos.

How quickly do you hope to be able to eradicate the stereotypes that have taken shape over centuries?

Actually, the Bolsheviks managed to do it very quickly. Behaviour stereotypes in tsarist Russia were very different

Mikhail Fedotov: looking for Russia’s missing motivation

from those that prevailed in the first 20 years of Soviet rule. Now we have to restructure public awareness just as drastically, while offering it totally different moral content, methods and goals.

We should not herd people into the kind of democratic, social, law-governed state that our constitution describes. We should instil in them self-discipline, self-organisation, a readiness to act rather than sit around idly.

Are you sure that Russian society seeks such independence?

Sponging is still strong in society. All around you can hear, “Give us money; give us houses.”We want to see a change of motivation and, consequently, in the nature of the demands.

What is needed is freedom of initiative, resources for independent rendering of social services and responsibility for the quality and scope of such services. It is important to encourage people to come forward and assume management in the running of society, and only ask from the state what they cannot obtain by themselves.

Originally published in Moscovskye Novosti Read full version at www.rbth.ru/12667

Cityscape Moscow’s advertising boom is swamping the capital with hoardings and banners

POLITICS & SOCIETY PROTECTING RUSSIA’S ORPHANS

RIA NOVOSTI

The Russian government is finally getting serious about the problem of adoptions by foreign citizens. A major milestone will be the scheduled signing in May of a bilateral agreement between Russia and the United States. But

corrupt requests of officials,” Mr Titov says.

These assessments might be questionable were it not for seemingly corroborating statements from the top about the extent of corruption, which, in Mr Medvedev’s words,“is not weakening and has the entire economy by the throat”.

Meanwhile, Yana Yakovleva says it is the criminal law that is currently the main channel for seizing businesses.“It used to be arbitration courts, but the quality and independence of the judges increased there,” she said.

monitoring international adoptions is only part of the solution to the problems of orphans: changing the system within Russia is also essential.

Read more at www.rbth.ru/12692

Turn left at L’Oreal, right at Toyota, straight on at Intel…

Two decades ago, the only big signs on buildings were Communist slogans. Now, even advertising executives question the visual chaos.

GALINA MASTEROVA RUSSIA NOW

It looks like a Moscow evening from inside the TGI Friday’s restaurant on Pushkin Square, even though it is daytime. There are plenty of windows, yet something stops the sun from coming in.

The building’s facade is sheathed in an advertisement for a Sochi ski resort, covering most of the early 20th-century Constructivist building on two sides. Just across the street, another building is shrouded on two sides with an advertisement for Chanel. Huge neon ads top buildings around the historic square.

Twenty years ago, a sign on top of a building was a Soviet exhortation to work harder. But Moscow has taken advertising to such extremes that even business executives say the city has descended into “visual chaos”.Moscow is drowning in its advertising – legal and illegal – on roofs, on pavements, straddling streets, down high-rises, fluttering, flashing, pumping neon, day and night.

Taking on the eyesore To applause from preservationists, the new city government, which took over after long-term mayor Yuri Luzhkov was fired last year, has vowed a 20pc reduction in the amount of outdoor ads in Moscow by 2013.“Historical buildings should rule, and not ad constructions in

them, has created the visual chaos that we see now,” he concludes. A crackdown on illegal ads would immediately cut the scourge by the target 20pc, he claims.

The previous official in charge of supervising outdoor advertising was arrested and charged with corruption. His case is ongoing, but he has been replaced under new mayor Sergei Sobyanin, whose plans are welcomed by one market expert. “The first step has already been taken around the Kremlin and the Novodevichy Cemetery,”says Andrei Beryozkin, head of Espar-Analitik, which analyses outdoor advertising.

But it is an ongoing battle.

As of last summer, even the paved ground underfoot has become an advertising canSlide Show at vas, as companies started to www.rbth.ru use graffiti-style tactics to saturate thoroughfares. LegWhat would Ivan the Terrible have made of this sight by his treasured St Basil’s Cathedral? islation has even been proposed in the State Duma to the central postcard area, impose large fines to stop the with its panoramic views,” THE NUMBERS pavement ads. says Konstantin Mikhailov, “The problem is not just the an advocate with the archiads,”Mr Mikhailov says.“It’s tectural preservation group the fact that the city does not Archnadzor. “It is all down The value of Rusof the eyesores in The small number have a concept for how the to a desire to get the most sia’s outdoor adverMoscow could be of illegal adverts money out of every square tising in 2010 – up removed if laws on removed in Moscow city should look.”

There is an official city artfoot in the city.”

18pc from 2009. advertising were enin a half-hearted ist, an official architect and Pushkin Square could be forced, say experts. clampdown by aucommittees ostensibly reMoscow’s equivalent of New thorities in January. sponsible for city planning, York’s Times Square or Lonbut there is no visual plan don’s Piccadilly Circus. But ads are so ubiquitous that protested in a Russian liter- cion of city corruption. for development, he said. travelling through the cen- ary journal, comparing the Maxim Tkachev, the head of “I would just like to see the tre feels like going from one bannered promotions to News Outdoor, a leading city that I live in,” added Ms Times Square to another. “knickers drying on a bal- player on the market, says he Kholina, noting that the The senses are bombarded cony”. and others have the “feeling change in the city is most apby huge video screens and Many of the ads are illegal. that the city is not interest- parent when a Muscovite banners over streets, creat- In January, the city removed ed in transparency and order” gives typical directions. ing an ad tunnel for the traf- 33 of the“pirate”ads, but the in outdoor advertising.“The “Turn left after Toyota, there fic beneath.“Advertisements lack of concrete action flagrant breaking of federal you will see L’Oreal, and after have conquered civilisation,” against those who put them law and Moscow rules, and Pepsi turn right… for the local novelist Arina Kholina up has fuelled more suspi- the selective application of house where Sony is.”

ALEXEY MAISHEV

In 2006,Yana Yakovleva was an ambitious co-owner of chemical company Sofex. By all accounts a savvy executive, she was still shocked when a special police drugs unit came to her offices looking for kickbacks.

Young and principled, MsYakovleva refused to pay up – a noble stance that got her arrested and thrown in jail. Before she knew it, she was teaching exercise classes to down-and-out women in a female detention centre.

“Some government officials consider businesspeople in Russia to be criminals in the first place,” she says.

“They can approach anyone, open a criminal case and begin extorting money. And the entrepreneur should understand that they will have to fight the bureaucratic machine to the death.”

Now 39, Ms Yakovleva spent seven months in jail awaiting trial. The Moscow native languished behind bars, she says, because she refused to take part in the scheme concocted by drug enforcement police.

Life in the detention facility was no picnic for someone with no previous “form”: “There was no shower, no refrigerator; we kept groceries on the windowsill and boiled water with a metal heating element that we also used for a TV antenna. The approach

but official statistics are patchy. Few are acquitted, though.

It is not only foreign investors who worry about rogue police and officials demanding bribes, arresting CEOs without cause, and taking over businesses. Recent research conducted by the Russian government revealed that 17pc of Russian businessmen intend to emigrate because of such fears, while 50pc would not rule out such a move. If it occurred, such an exodus would undermine the president’s plans to modernise Russia.

Mr Medvedev has repeatedly said that business must be supported – to boost the economy, break dependency on raw materials, create new jobs and pay off the budget deficit.

Instead

INTERVIEW MIKHAIL FEDOTOV

RIA NOVOSTI

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Chernobyl

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03

Legacy A quarter of a century after the world’s worst nuclear accident, life goes on around Ukraine’s Chernobyl site

The invisible menace goes to ground THE PLANT The Chernobyl Nuclear Power Plant is located in Ukraine near the city of Pripyat, 19 miles north-west of Chernobyl and 68 miles north of Kiev. The first reactor was built in 1977 and the fourth in 1983.

THE CATASTROPHE At 1:23am on the morning of April 26, 1986, a 20-second shutdown – part of a planned systems test – was followed by a sharp power surge in the fourth reactor that triggered a series of explosions and a fire.

Slide Show at www.rbth.ru

in a giant sarcophagus made of concrete and steel. But the guides from the Chernobylinterinform government agency, which manages and controls the zone, reassure the group.“The radiation dose received from a day spent here is lower than from a dental X - r ay,” e x p l a i n s Yu r i Tatarchuk. He has worked on the site since 1998, and accompanies journalists and people in search of extreme tourism experiences.

Yet while its safe enough to visit the zone, the hazard is more insidious. The area is a picture of natural growth in the springtime, and therein lies the problem – here and much further afield. Beyond the exclusion zone, which was cleared immediately after the accident, lie hundreds of square miles of inhabited land where the soil absorbed the

VERONIKA DORMAN RUSSIA NOW

To enter the 30-kilometre radius exclusion zone around Ukraine’s decommissioned Chernobyl nuclear power plant and the No 4 Reactor that exploded on the night of April 26, 1986, visitors must pass through a checkpoint and show previously obtained permits. They must also sign a form assuming all responsibility for the risks involved before the site visit begins.

Handheld dosimeter detectors begin to wail and display radiation levels far above the norm as you near the wrecked reactor, which is now encased

toxic debris that spread from the damaged reactor. In the intervening years, the locals have been exposed through their food: mushrooms, berries and milk from cows grazing freely are all sources of radiation.“Seventy to 95pc of radiation exposure today is internal, compared to five to 30pc external,” notes Valery Kashparov, director of the Ukrainian Institute of Agricultural Radiology.

“We don’t have an officially recognised diagnosis, but children in the contaminated zones have weakened immune systems, often showing growth deficiencies,” says Olga Vassilenko, a doctor at Les Enfants de Tchernobyl, Kiev’s French medical centre.

This is worrying for Ivan Nevmerzhitski, a doctor at the Lipniki hospital in the Zhitomir region.“Cases of stom-

ach and lung cancer have risen these last 25 years, and bronchitis now takes weeks to cure because people have no more immunity,” he explains.“In my opinion, this is directly tied to radiation exposure through food.”

Products sold in supermarkets are strictly monitored, but not those sold illegally by the side of the road by rural residents. And neither is the food eaten daily by villagers.

According to studies carried out by Greenpeace, in regions such as Rivnenska (located 150 miles north-west of the plant), it is possible to find concentrations of the radioactive isotope caesium-137 in milk up to 16 times the acceptable limit. And 73pc of pastureland is still contaminated.

It’s a chilling thought for visitors from other parts of the

Through the hell of the Red Forest: a liquidator remembers Alexander Antonov was pressed into action in the Chernobyl clean-up. Unlike some of his comrades, he survived to tell the tale.

the trees turned red and died.

“The villages were all deserted, and the birds’ nests were empty,” he recalls.

ANASTASIA GOROKHOVA

The soldiers lived in a tent in the 30-kilometre exclusion zone around the reactor. Although Mr Antonov was there as a truck driver, to bring soldiers to the area daily, those in charge decided they needed someone who could use a typewriter to type up reports – and he was chosen.“That probably saved my life,” he says.

Mr Antonov was there for 50 days and drove three times to the reactor, taking him past cooling ponds that had frozen over: “I could not believe my eyes when I saw an ice fisherman out there.”

The majority of the soldiers did not wear protective masks, even though many of the objects lying around were heavily contaminated. Mr Antonov was not as exposed to the radiation as many others ,thanks to his typing duty.

But to this day his skin reddens severely when exposed to the sun, the result of his time as a so-called “liquidator”, doctors tell him.

One scene in particular remains seared into his memory: the sight of a young soldier from Turkmenistan who sat beside him in a hospital

Spared by chance

Alexander Antonov sits chain-smoking at the kitchen table in a worn jacket and jeans. He’s had 25 years to reflect on his experience, but the retired journalist still struggles to find the words.

“After Chernobyl, I know what it must have been like in a war,” he finally begins.

In his youth, Mr Antonov had been stationed as a Red Army soldier for almost three years in East Germany. Little did he expect to be conscripted again – at the age of 40.

Immediately after the Chernobyl reactor explosion on 26 April 1986, young recruits were sent to the disaster zone to begin crude clean-up efforts. Mr Antonov heard from people who were there how that went. In one instance, teenage soldiers were sent up to the roof of the undamaged reactor where the radiation was strongest.“They ran up like they were possessed, picked up say a chair leg with a shovel, threw it off the top and then ran back down, all in about 40 seconds,”he says.

Ample time to receive a lethal dose of radiation.

OLGA MATVEEVA

RUSSIA NOW

Horrors of Chernobyl still haunt Alexander Antonov

“As it became clear that they were all doomed to die, they called in 40-year-old reservists. Their logic was something to the effect that they already had children and had nothing else to live for.”

And the journalist was one of them. One evening in January 1987, two military personnel came to his door, checked his passport and ordered him to appear at armed forces headquarters the next morning. Mr Antonov knew immediately what this meant and that there was no avoiding it. A few days later, he was riding in a truck through the“Red Forest”– woodland near the power plant that had been exposed to such high levels of radiation that

world who come here to pay homage to the victims and heroes of those dark days, a reflection underscored by the current events at Japan’s tsunami-ravaged nuclear power plant at Fukushima.

Fresh controversy

Close to the reactor, steel rods jut towards the sky. This is the construction site for the new sarcophagus that will eventually cover the current structure, which has fallen into disrepair. The project, which since 2007 has been headed by the French consortium Novarka, is a controversial one. Tens of millions of euros have already been swallowed up by a construction venture that has yet to begin, even as the current model approaches the end of its 25-30 year lifespan.

“The main objective of the

ma. The worst fallout covered a radius of about 20 miles, but more than 60,000 square miles of Ukraine, Belarus and Russia were also affected.

THE CONSEQUENCES Reactor four was destroyed, releasing more than 500 hazardous radionuclides into the atmosphere – 190 tons of radioactive material altogether.

It took almost two weeks to extinguish the resultant fire.

The accident exposed people living in Chernobyl to radiation levels 90 times greater than those generated by the atomic bomb dropped on Hiroshi-

THE VICTIMS Thirty-one people were killed on the spot, while 600,000 “liquidator” workers involved in the clean-up received high doses of radiation. After-effects of the accident are thought to have caused or contributed to the deaths of almost 18,000 people, including children, over the following two decades.

The exact number of casualties has yet to be calculated.

new shelter was to allow the dismantling of the old sarcophagus and the extraction of the nuclear fuel,”explains Nikolai Karpan, who worked as the plant’s chief engineer from 1969, was a member of the huge team of“liquidators” of the consequences of the accident until 1989, and currently heads the assessment programme of the Chernobyl National Party.“But this goal was completely overlooked; the current project is an empty shell that doesn’t plan for a dismantling process any more than it enables protection for the people who will work inside.

“The chief danger is internal exposure from the inhaled radioactive dust,”says Mr Karpan, adding that, 25 years after the catastrophe, the internal absorption of these radioactive particles is an on-

going threat for the plant’s employees, as well as the thousands of people still living in contaminated areas.

THE FUTURE Work is underway on a new 340-foot arch-shaped sarcophagus for the fourth reactor block. Funded by 28 international donors, the Shelter facility replaces the one built in 1986. It is due to be completed in 2015, and will have a service life of 100 years.

The last operational reactor at the plant was shut down in December 2000.

According to the dismantlement schedule, the remaining nuclear fuel will be removed by 2013, and the reactors between 2045 to 2065.

SOURCE: RIA NOVOSTI

on board, nor was anyone given any information beforehand – as evidenced by the ballet pumps worn by a young Canadian, who was obviously unaware she’d be walking Tourist magnet While still some way off a around the radioactive ruins package-holiday favourite, of Pripyat, the nearby ghost Chernobyl is now a destina- town littered with broken tion on the“extreme tourism” steel, concrete and glass. circuit. For several years, op- The excursion was quick and erators in Kiev have offered with a minimum of explanaexcursions into the zone, for tion, accompanied by the conaround £140-£215. The serv- stant background din of the ice is frugal: a bus takes dosimeters carried by most groups to the checkpoint, visitors. The noise is largely where they’re handed over to superfluous, however, because the landscape speaks for itChernobylinterinform.

“I decided to make the trip self: the dilapidated high-ris[into the exclusion zone] to es and streets of Pripyat, immerse myself in the nucle- which have stood empty since ar problem; to spend a few its evacuation a day after the hours thinking about it,”says accident; the deserted villagRonan, an American lawyer es; and the hillocks marked with yellow triangles, where who is in Kiev on business.

On one recent trip, however, particularly contaminated there were no agency people homes were buried.

Active nuclear power plants in Russia

POLLS

Which energy for the future?

PEOPLE IN 130 RUSSIAN TOWNS WERE ASKED TO CHOOSE THEIR ALTERNATIVE TO OIL AND GAS...

in Kiev: “He looked ghastly, his eyeballs were literally hanging out of their sockets.”

The soldier, who was also a truck driver, had got out to change a tyre that blew in the middle of the Red Forest – where they were under strict instructions never to stop. “Many died there,” Mr Antonov says quietly, lighting another cigarette.

Badge and a fruit basket

The only way they could cope with the horrors of the work was, he says, with vodka. People have generally avoided the subject of Chernobyl and what he went through. Not even his fellow journalists at Pravda would speak to him about it, perhaps afraid of what they’d hear, he says.

For his services as a liquidator, Mr Antonov received a monetary bonus that allowed him buy a car, a rare privilege in Soviet times. But he ditched it after the 1991 Soviet collapse because it was a reminder of something he wanted to forget.

In 2006, on the 20th anniversary of the disaster, the Soviet Union caught up with him one last time:“The state presented me with a liquidator badge, a basket of fruit and vegetables, biscuits and chocolate – just like in the ‘good old days’.”

THE GREAT ENERGY DEBATE

Nikolai PonomarevStepnoi

Bulat Nigmatullin

MEMBER OF THE RUSSIAN ACADEMY OF

DEPUTY MINISTER FOR ATOMIC ENERGY

SCIENCE; FORMER DEPUTY DIRECTOR OF

“

THE KURCHATOV INSTITUTE

“

Russia is doing the right thing in planning to build 32 new reactors by 2020. Russia is not Saudi Arabia, and it must stop being a mere supplier of raw resources. Oil and gas reserves won’t last for ever; at some point Russia will have nothing to export. Therefore, it must develop and export atomic energy if it wants to retain its role as a global energy supplier.”

ONLINE ... AND DECIDE THE IMMEDIATE FUTURE OF THE NUCLEAR POWER INDUSTRY IN RUSSIA

ENERGY EXPERT, FORMER DIRECTOR FOR NUCLEAR POWER PLANT SAFETY, AND

Instead of renovating and modernising [inefficient conventional power plants], the state prefers to invest in nuclear plants, which in such numbers [as planned by 2020] are unnecessary. Also unnecessary is Russia’s complete and immediate withdrawal from nuclear energy. It is rich in coal, gas and uranium, which means that alternatives like renewable energies, constitute no real strategic path and, moreover, are far too cost-intensive.”

Subscribe to our free monthly e-paper

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PHOTOXPRESS

Twenty-five years on, Ukraine is still grappling with the consequences of the 1986 Chernobyl nuclear disaster, while tourists come to ponder a topical tragedy.

AFP/EAST NEWS

Graffiti art reminiscent of Edvard Munch’s The Scream adorns a wall in Pripyat, near the shrouded fourth reactor

ALAMY/PHOTAS

A catalogue of disaster

Three Mile Island; Chernobyl; Fukushima: what do these disasters have in common? And can nuclear energy be cured of its problems? Independent experts in nuclear surveillance and nuclear safety, from 10 different countries, offer their opinions.

Read full text at www.rbth.ru/12680

SOURCE: LEVADA CENTRE

04

Economy

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Business in brief

interview Arkady dvorkovich

Helicopter firm to float on stock exchange

Risks and returns: the rocky road to economic health

With WTO membership beckoning, russia is steadily gearing up to meet international economic competitors head on

The anti-corruption drive works. There has been positive change, but it won’t be finished in a year Kaluga [home to one of Russia’s main car production clusters] and [the autonomous region of] Tatarstan are good examples of active and progressive regions.

A huge responsibility rests on the governors and mayors of regions. We need to introduce best practice across Russia, but we cannot impose this top down.

We could do more to make this work, but we are not like [such progressive former Soviet republics as] Georgia or Estonia – both those coun-

There is a lot of talk about reforms, but why are they going so slowly?

The reform drive has slowed as there is a lack of focus.

This is such a big system that, if people know there is a po-

One of the main complaints of foreigninvestorsisthattheRussian state plays too big a role in the economy. What is being done to reduce its share?

We have already agreed to sell off state-owned stakes, but it is a question of timing. However, it is clear that eventually we don’t need state participation in most sectors. [State-owned retail banking giant] Sberbank is a special case, and we need to be careful as it has a big social component. Gazprom, too, and [the state-owned rail monopoly, the federal power grid company and the oil pipeline monopoly] are also all special cases – but everything else, like VTB Bank, does not need state participation. Still, the market will only bear so much and we can’t sell all these things at once.

However, the president has already ordered an increase in the pace of privatisation.

The National Banking Council board just agreed to sell 7.58pc of Sberbank over the next three-year period. We are preparing this now, and waiting for the best time. It will happen in 2011 or 2012, depending on market conditions, but the decision has already been made to do it.

Maybe the biggest complaint about Russia is the high level of

BIOGRAPHY

Arkady Dvorkovich AGE: 39 hometown: moscow

Arkady Dvorkovich graduated from Moscow State University with a degree in economic cybernetics, received a Master of Economics degree from the Russian School of Economics and an MA in economics from Duke University in North Carolina. From 2001-2004 he was a deputy minister for economic development and trade, and, after serving in Vladimir Putin’s administration, was in 2008 appointed as presidential aide and Russia’s G8 sherpa by Dmitry Medvedev.

corruption. Has any progress been made in the anti-corruption drive?

The anti-corruption drive works and the trend [towards improvement] is there. There has been a positive change, but it will not be finished in a year. Bribes are going up, but that is partly because people who take bribes can see it is not going to last too long. They want to catch the “last train”.

But this is a systemic issue.

This is not just a bunch of criminals: corruption exists

Cars Foreign firms invest heavily as tax window shuts

Pole position beckons as big car firms motor in Propelled by a recent string of major investment deals, Russia’s car market is on track to emerge as Europe’s largest by 2020.

Clare Nuttall

reuters/vostock-photo

business new europe

The global car market just turned a major corner. Racing to beat a February deadline to sign off on new investment agreements (exempting them from new tightened limits on imports), a flock of big international names took a long-term leap into Russia. These moves will leave the country in pole position as top European carmaker by the end of the decade, experts say.

As of this month, the government imposed a hike in duties for any producer that did not pledge to increase vehicle production to 300,000 units, and increase the proportion of domestic made inputs to 60pc by 2020. The investment race was prompted by changes to the tax code that came into effect on March 1. Under the new rules, carmakers may import components with 0.3pc duty in return for investment agreements to build those 300,000 cars locally per year.

Previously, auto companies could avoid punitive tax rates on parts by producing 25,000 cars in-country, so some moved to build assembly lines in Russia with little further commitment.

With extra foreign muscle, Russia’s car market is revving up

A batch of deals signed last month saw global brands teaming up with domestic producers to boost production. Of the eight international manufacturers already working in Russia, six submitted proposals, and the new investment agreements are expected to be signed by June, according to Alexander Rakhmanov, director of the automotive and agricultural machinery department at the Ministry of Industry and Trade, which oversaw the process.

Those who took the plunge include Ford Motor Co, with an assembly and distribution venture with OAO Sollers, while Volkswagen AG and

OAO GAZ agreed to produce VW brand and Skoda cars at a Russian factory. General Motors and Toyota announced investments of over $1bn to boost local production, and Fiat also pledged to hit the magic number of 300,000 locally produced cars.“We didn’t expect such a strong response from the producers,” said Mr Rakhmanov. “So now we are sure that Russia will be the number one car producer in Europe in the next years.”

The outlook is good. Boston Consulting Group predicts that the Russian auto market will overtake Germany to become the biggest market in Europe – and the

leading automotive producers who have agreed to significantly boost production. Is Russia ready to compete head to head in the global car market, assuming Russia joins the WTO and import tariffs are lowered?

We hope to attract new investment to Russia and this is not just assembling [cars].

I am not sure that this can be achieved just by raising tariffs, because it is about increasing the quality of the investment climate.

We are not quite ready to compete head to head with international producers, but the WTO includes a sevenyear transition period and that is enough to be ready.

Big companies like [Lada maker] Avtovaz and GAZ are still not competitive, so we need these seven years. We also need good strategic investors.

at all levels and comes back to the state’s involvement in the economy. If we can reduce this, then the potential for corruption will also fall.

Corruption is connected to the preferential treatment that state-owned companies receive.

The share swap deal between BPandRussianoilmajorRosneft ran aground when the Swedish Arbitration board froze it amid a dispute over BP’s shareholder agreement with its Russian joint-venture partner in TNKBP. Will the government lean on this partner, the AAR consortium, to resolve the matter?

Clearly this deal began with a legal risk, and everyone knew before the deal was done [that there was an issue with the shareholder’s agreement]. But we hope the parties will find a compromise and the partnership will not be entirely broken.

With over $600bn in hard currency reserves going into the crisis, it seemed the government thought it could bail out the whole economy. However,

The government just signed off on a round of big investment deals with many of the world’s

Russia was badly mauled. As the crisis recedes, what will be the biggest effects?

If this had been a local crisis we would have had enough money to deal with it, but it was a global crisis, and we couldn’t deal with that. The conclusion is that we need to change the structure of the economy and not repeat the same mistakes.

But look at the results of the crisis: there was no run on banks, no major bankruptcies. Some people bought dollars, but in a few days they sold them again and the demand for the rouble went up.

There is trust in the banking sector and the rouble that we didn’t have before.

One of the main problems we face is that people don’t realise we are already competing globally. But now, after the crisis, people are starting to understand this. They realise that we can’t rely on our own market.

Prepared by Ben Aris (Business New Europe)

Energy Pipeline troubles strengthen the case for LNG

world’s sixth largest – in the next nine years.“International carmakers are pretty excited, because they forecast significant growth in car sales in the next decade,”said Mikhail Ganelin, transport analyst at Troika Dialog.“We expect that car sales will recover to pre-crisis levels by 2013.”

The Russian consumer should also benefit.“Russia is a very big market, and that is why foreign companies are flocking in. More competition will mean lower prices for consumers, and thus more sales,” said Alexander Kazbegi, transport analyst at Renaissance Capital.

Russia is currently under-invested, with approximately £890 (€1,000) per capita of foreign direct investment in 2010 – compared to between four and eight times as much for the Central European states. Yet the government’s investment strategy for the automotive sector has proved to be a winner.

The new agreements are designed to follow on from the existing ones, which expire in 2020. Meanwhile, the Kremlin is hurrying to complete the reform of a sector that employs well over a million people. If Russia does accede to the WTO this year, after a 16-year effort to join, it will face a mandatory reduction on import duties for cars.

The investment policy for the automotive sector dovetails with Kremlin goals of modernising and diversifying the economy, and it is expected to become an investment node for building out industry, while serving as a blueprint for other sectors.

“For every one job that we create in the automotive industry, we create another 16 jobs in ancillary sectors,”Mr Rakhmanov said, adding that the Russian market is still far from saturation point.

New liquidity for global gas market Faced with gas pipeline problems, Russia is ramping up the development of liquefied natural gas as an alternative supply option.

TIm gosling

business new europe

As fossil-fuel demand and prices surge due to recent events in North Africa and Japan, Russia is moving to strengthen its export operations with construction of new facilities to produce liquefied natural gas (LNG).

Transported by special freezer ships, LNG in large quantities frees both producer and purchaser from the tangled politics involved in building permanent pipelines. Russia already has one LNG plant on the Far Eastern island of Sakhalin that sells much of its output to Japan. In March, the Kremlin announced plans for a similar processing plant on Russia’s western coast.

Building an LNG plant on the Yamal Peninsula, which taps into the vast reserves of western Siberia, is an alternative to supplying natural gas to Europe via pipelines.

But it also underpins prospects for Russia’s contentious South Stream pipeline project to southern Europe by broadening supply options, according to Energy Minister Sergei Shmatko.

“Russia does not face a bottleneck in its obligations under the South Stream project, but has several alternatives,”Mr Shmatko told Prime Minister Vladimir Putin in a recent report.

Uniting Russia's semi-state

photoxpress

A year ago there was a string of opinion pieces calling for the ‘R’toberemovedfromtheacronym Bric. Certainly Russia is the least loved of the four emerging market powerhouses. Do you think that is fair?

China and India are a lot bigger than Russia and that is important to investors. They have a total of 2.5 billion people compared to Russia’s 142 million. Russia is better compared to Brazil, where the size of the population and the technological level are similar. But the expectations for Russia are much higher [than for Brazil], as we are treated like a European country and we need to reach the same level of comfort for foreign investors.

So, yes, that is fair: we are a European country and we should have the same standards.

tries are smaller than most Russian regions.

ria novosti

litical focus on an issue they follow up on it, but if not then they go back to doing the same things they did before the reform.

We have made progress in cutting red tape and there are less licenses than before, but there is not enough focus.

The problem is made more difficult as we have to try and combine federal initiatives with an active regional administration participation if we are to improve the investment climate.

There are some regions that are already very active and have been very successful –

Arkady Dvorkovich is one of the faces of Russia’s liberal reform programme and, as an aide to President Dmitry Medvedev, is in a position to make a difference.

Here, he discusses the economy, the crisis and how corruption has impacted Russia’s progress.

...in fact it’s a gas: a worker at the Sakhalin LNG plant

gas giant Gazprom with Germany’s BASF and Eni of Italy, South Stream would pipe Siberian gas to southern Europe. But the project is ranged against the rival Nabucco pipeline promoted by the European Union which, if built, would skirt Russian territory and link Europe directly to the gas reserves of the Caucasus and Central Asia. Recent revolutions in North Africa have bolstered South Stream by jeopardising supplies for Nabucco, but both pipelines have been embroiled in geopolitical wrangling by countries along their routes.

The planned LNG processing plant in Yamal would break the deadlock, as liquefied gas can be shipped to anywhere that has a port and facilities to offload it. Overall, exports of LNG from Yamal, Sakhalin and the Shtokman gas field in the Barents Sea should move up

to 85 billion cubic metres of gas annually to Europe and Asia, Mr Shmatko said last November.

Mr Putin also ordered the energy minister to study the possibility of building an LNG plant on the Black Sea coast, close to Russia’s main oil export ports and the planned undersea route of the South Stream pipeline, which will come ashore in Bulgaria or Romania.

Gas is coming back into focus after oil prices rose rapidly due to the North African political turmoil, plus the impact of Japan’s recent earthquake and tsunami tragedy and ensuing nuclear accident.

VTB Capital estimates that, with the disruption of oil supplies to Europe caused by the Libyan conflict, Russian gas exports could this year grow by 10-15 billion cubic m e t r e s , o r 7- 1 0 p c o f Gazprom’s total exports.

Prices on European gas spot markets also spiked after Japan’s earthquake.“We believe the increase in the spot price reflects the market’s anticipation that LNG demand will be significantly more than previously expected, as Japan strives to make up for the loss of nuclear power generation capacity,’ said VTB analyst Lev Snykov.

Meanwhile, leading private gas producer Novatek spent $526m (£321m) on a 25.1pc option on the plannedYamal LNG plant. Novatek already owns 51pc of the project and has a call option on another 23.9pc stake, should the plant go ahead.

Following a recently signed $370m deal with the United States to supply 21 Russian-made helicopters to Afghanistan, state-controlled Russian Helicopters has decided to launch a $500m initial public offering on the Moscow and London stock exchanges.

The company was formed last year from 11 regional helicopter manufacturers in an effort to streamline production and development.

It produces a broad range of helicopters that serve as the backbone of both Russia’s military aviation and the oil and gas industries.

One of its models, the Mi26, is one of the largest helicopters in service in the world, weighing around 50 tons.

With the Russian armed forces due to replace around 1,000 Mil-family helicopters in the next decade, Russian Helicopters anticipates a high demand for the IPO. The company plans to use the money to pay off debts and purchase smaller manufacturers, chief executive Dmitry Petrov said in a statement.

Moscow climbs a notch on the top cities list

lori/legion media

Moscow this year jumped up a spot in the global property company Knight Frank’s Global Cities Survey to 21st place.

The survey measures the importance of cities to wealthy individuals from around the globe. It compares cities by economic activity (Moscow took 16th place), political power (31st), quality of life (19th) and knowledge and influence (21st).

NewYork, London and Paris topped the survey, while seven of the top 10 spots went to cities in Western Europe, or North America.

However, the fortunes of developing countries (and the so-called Brics: Brazil, Russia, India and China) in the rating are expected to rise over the decade, with Moscow predicted to take 10th place by 2020.

New law grants teaching rights to foreigners

itar-tass

The Federation Council, the upper chamber of Russia’s parliament, has passed amended legislation granting the right to teach without additional permission to foreigners who enter the country on assorted regular travel visas.

“Foreign citizens invited to Russia for business or humanitarian purposes, or to work here, may be involved in teaching at scientific organisations and state-accredited universities, with the exception of professional religious education institutions,”the Itar-Tass news agency quoted from the ruling. Foreigners complying with the new norms will not be required to obtain special work permits.

The move accompanies a softening of migration legislation and is aimed at people “who want to live in Russia, respect Russia and seek additional opportunities”, said Vladimir Pligin, co-author of the bill and chairman of a parliamentary committee on constitutional legislation.

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MOSCOW BLOG

Equities Exchange-traded funds attract overseas cash, but increase market volatility

The rise and rise of the ETF The rapid rise of exchangetraded funds in Russia as a convenient means of tapping this emerging market has divided expert opinion.

Nick Watson

reasons to invest in ETFs

1

business new europe

ETFs are transparent tools, easy to understand even by investors lacking advanced financial knowledge. Their simplicity offers a welcome bonus in the post-recession confidence crisis.

2

With just one payment, ETFs allow you to participate in a variety of underlying instruments. Such diversification translates into reduced risks to the portfolio, while aiming for sustainable long-term growth.

3

Since they do not require the active management of financial professionals, ETFs have a lower cost (by as much as 50pc) than mutual funds. Past results show that such an approach often means better outcomes for the investors.

reuters/vostock-photo

After ignoring the rise of the fast economies for much of the Nineties, mainstream investors have woken up to the huge gains that can be earned in a relatively short amount of time from these markets, and have turned to the exchange-traded fund (ETF) as their vehicle of choice. However, long-term investors into the biggest emerging markets warn that these funds may destabilise fast-growing stock markets.

Russia’s stock market has been the star performer this year, but as the economy is increasingly dependent on oil, analysts worry that the increased importance of ETFs means any correction could be sudden and sharp.

The appeal of ETFs is that, unlike a mutual fund, these funds can be traded on an exchange. That means investors can get in and out of a fund instantly. But, like a mutual, the underlying fund is based on a basket of stocks that give the diversity that is the cornerstone of any long-term investment in a risky asset class. They also have low costs and a beneficial tax status.

“In many ways, the parallel development of exchangetraded funds and the investment case for emerging markets has been a happy coincidence,” said Chris Weafer, head of strategy at UralSib in Moscow. “ETFs have enjoyed a huge wave of interest from investors wanting to tap into high-growth markets, as they can offer broad exposure or drill down into specific areas.”

Few would have expected emerging markets to benefit from the flight-to-safety trade, but that is what has happened as developed markets bury themselves in a debt hole. Emerging-market investments have done very well over the last two years, and Russia’s market has been one of the best performing

All bets off as Black Swans come home to roost

3

ETFs now account for around half of the $20bn tied up in Russia-dedicated funds

Global equity market performance: Feb-March 2011

in the world, up about 150pc in 2009 and 22pc in 2010.

Most gains in 2010 were made in other emerging markets, but Russia is the frontrunning Bric market this year, up 15pc over the first three months of 2011.

The leading RTS index passed the psychologically important 2,000 mark in

March as the valuation of Russian stocks overtook their pre-crisis highs for the first time in two years. The RTS is expected to pass its alltime high of 2,487.92 later this year.

Russia is now attracting considerable overseas cash, and fund tracker EPFR Global says that new money flows

into Russia-focused funds in the last week of March amounted to $486m – up from $139m the week before.

By the end of March, assets under management in Russia-dedicated funds hit a new all-time record high, breaching the $20bn mark, according to Uralsib. Half of this is now in ETFs. “ETF investors continue to increase exposure to Russia,” said Mr Weafer.“Notably, almost all inflows into Russia funds came from country ETFs, which is a continuation of the trend of large inflows into country ETFs, which began late last year.”

However, thanks to the stocklike nature of ETFs, fund managers say they add to the volatility by acting like “hot money” – highly speculative investments looking for short-term gains.

The point was brought home in March when all emerging markets experienced a selloff as developed markets showed signs of revival.“The Russian market is currently standing apart from this

trend, said Liam Halligan, chief economist of Prosperity Capital Management, a dedicated Russia fund.

“As a difficult EM, Russia received a disproportionately low share of the portfolio investment that fled the West following the credit crunch.

Having absorbed much less Western “hot money”,Russia has been less susceptible to profit-taking, and the more general sentiment shift away from EM and back towards the developed world.”

The silver lining in the rise of ETFs is that, as a mainstream investment vehicle, the word“Russia”has entered the lexicon of financial advisors selling to the small investor and the more conservative institutional investor.

“ETF inflows [to Russia] reflect the fact that Russia is increasingly cited among mainstream professional investors as a market with good prospects during 2011 and beyond,” said Mr Halligan.

It is an education process that will ultimately benefit everyone. In the meantime,

investors can expect a choppy ride as fund managers fret over the turmoil in the Arab world, and its effects on oil prices. If these fall and ETFs take fright, there could be a sharp correction in Russian share prices.

In one worrying sign, Bloomberg reported that the Market Vectors Russia exchangetraded fund, the biggest USlisted Russian ETF, sharply increased its short selling of Russian funds in late February. Short sellers sell borrowed shares, hoping to buy them later at a lower price and return them to lenders.

Other investors point to the still-cheap valuations: Russian stock, on a price-toearnings basis, is the lowest among 21 major emerging markets, notes Bloomberg.

“Russia is in pretty good shape at the moment,” said Julian Mayo, a London-based money manager who helps oversee some $3.5bn in developing nations at Charlemagne Capital Ltd. “I think it will continue to outperform.”

Drinks In the massive domestic spirits market, where vodka leads, Scotch follows

Whisky: the new toast of the town Russia is still the bastion of vodka manufacturers, but their whisky-distilling rivals are determinedly closing in.

THE numbers

2.4bn

Roland Oliphant The Moscow Times

litres of spirits were consumed in Russia in 2009

40x

the amount by which sales of imported spirits have grown since 2001

£2

ruslan sukhushin

Could whisky really be the new vodka? Not yet, in Russia at least, but this staple of the western drinks cabinet is the firm favourite among a growing sector of the population.

“Gin is down, tequila is down, cognac is static, but whisky imports are growing,” says Erkin Tuzmukhamedov, a prominent sommelier and one of Russia’s foremost whisky aficionados. “It was the only spirit to continue to grow during the crisis, and it accounts for about twothirds of all spirit imports.”

Russia is the world’s largest overall spirits market, consuming 275 million nine-litre cases in 2009, of which domestically produced vodka accounted for 229 million cases, according to the Edinburgh-based Scotch Whisky Association. There may still be a mountain to climb to assail vodka’s supremacy, but marketing managers in Edinburgh see “significant room for growth”.

One reason is that whisky is genuinely new to the country. When the global craze for whisky took off in the late19th century, imperial Russia was largely insulated by a state monopoly on alcohol, a situation continued after the 1917 Revolution. For the next 70 years, the Soviet public had two choices of legal spirits: vodka, and Frenchstyle cognac, the latter mostly from the Caucasus.

Whisky wasn’t exactly unknown in the Soviet Union:

Acquired taste: whisky is becoming a favoured tipple of the more discerning drinker

I spy a single malt, says KGB’s Yuri During his 1977-84 posting to London, former KGB spy Yuri Kobaladze headed the wine club of the Association of Foreign Journalists as part of his cover. A love of malt whisky that grew from this “duty” returned with him to the Soviet Union. “I came to the conclusion that there is nothing better than a 16-year-old Lagavulin,” he recently recalled.

“Later, in Nineties Moscow, everyone became interested in whisky, and I was often called in as an expert. The high point was my participation in a TV show where I was asked to identify three types of drinks based on their smell and taste.

“In the second glass there was

something ordinary: Red Label.

I guessed correctly. In the third glass they had poured what I took to be a single-malt whisky. I didn’t know the name, but I could tell that it had been diluted. It turned out that the props men had taken swigs from the bottle and topped it up with tap water.

“When this was discovered, the professional bartender judging the contest took his hat off to me: it was the first time in his 40-year career that he had met a man able to tell from one sip whether a drink had been diluted. That made my reputation as a great whisky expert – but it all began with ordinary visits to London pubs.”

the party and security elite could enjoy imported Ballantine’s, and an enterprising drinker with money could track down a bottle of black market Teacher’s. But Russians really only discovered whisky en masse after Boris Yeltsin lifted the state monopoly on alcohol in 1992.

“It was a glamour thing.You watch a Hollywood film, and everyone is drinking whisky; you read Western literature, everyone is drinking whisky. We’d never had it before,’’ Mr Tuzmukhamedov recalls.

What started as an expensive novelty and status symbol has become a feature of the more discerning drinker.

In the past 10 years, sales of imported spirits have increased 40 times, driven by rising incomes and the

is the current level of tax levied per litre of spirits sold. A fourfold increase is planned

growth of the middle class, says Vadim Dobriz of the Russian Regional and Federal Alcohol Markets Studies Centre. And whisky’s novelty has kept it ahead of rivals gin, rum and tequila.

Mr Dobriz attributes much of this popularity to drinkers – especially women – who yearn for an alternative to knocking back knocking back shots of vodka.“Women don’t like vodka; they want something with flavour that they can sip. So you’ll find female drinkers are a significant part of whisky’s success,” he says.

Today, the Russian market in many respects resembles the rest of the world. As elsewhere, it is dominated by Scotland. The biggest-selling single malts are Glenfiddich and Glenlivet. White Horse,

05

The Famous Grouse and William Lawson’s led the pack in the blended segment in 2010, while the most popular premium blends include Johnny Walker Black Label, Chivas Regal and Dewar’s.

But there are peculiarities.

Irish whiskeys have a disproportionately strong presence, because Jameson was one of the first brands to enter the market, in the early Nineties.

And, apart from the ubiquitous Jack Daniel’s, North America is sorely under-represented.

Plenty of obstacles still remain for those working this market. The Federal Service for Alcohol Market Regulation is pledging to reduce the number of import licence holders by half. Then Alexei Kudrin, the finance minister, last month unveiled plans for a fourfold increase in the excise tax on alcohol by 2014.

For consumers, that would mean a huge tax increase on half a litre of vodka and other spirits – from the current 46.20 roubles (£1) to 180 roubles (£3.90).

But Russian distillers are still optimistic. In February, Alliance 1892, a Kaliningradbased spirits producer, signed a deal with Scottish suppliers to import and bottle its own blend. Dubbed “Seven Yards”,the newcomer will take on The Famous Grouse and White Horse in the economy segment. And the Praskoveiskoye winery and cognac distillery in Stavropol advertises a three-year-old oakaged whisky that “combines centuries of Irish tradition with the experience of Praskoveiskoye’s cognac masters.”

A longer version of this article was originally published in The Moscow Times.

Ben Aris

Special to Rn

L

et us take an esoteric look at how quantum mechanics and maths puzzles relate to investment, now that the abstruse has just invaded our daily lives – in the form of the earthquake and tsunami in Japan.

These occurrences constitute a Black Swan event, or something that has an extremely small chance of happening, and so governments and investment bankers spend very little time thinking about or planning for them.

The Japanese authorities had contingency plans – but none anticipated an earthquake and tsunami, a nuclear plant’s cooling system being washed away and its reactors approaching meltdown all at the same time.

It’s an understandable mistake: our lives are for the most part a succession of ordinary days; summers are hot; and the train to work comes at 8:17.

The term “Black Swan” comes from the danger of assuming everything stays the same.The swan was used in a famous inductive reasoning example: “All swans are white” was a universal truth, as each swan ever seen was white – until a Victorian explorer found a black swan in Australia.

We are very poor at assessing just how likely the very unlikely is, and the unlikely happens a lot more often that one might expect. This is neatly illustrated by the birthday problem in mathematics:“How many people do you need in a room so there is a 50:50 chance two were born on the same day?”

The intuitive answer is 183 (ie half of 366, which covers every day of the year plus one). The actual answer is only 23 people. The reason is (without getting into detail) that you have to calculate the chances of an iden-

tical birthday for each person individually and sum all the probabilities up, rather than dividing the chance for the group as a whole by half. (You get a 99pc chance of two identical birthdays with just 57 in the room.)

It is the interconnections between each and every variable that is important – and hard to see.These add up rapidly in complicated systems, and what should be extremely rare events happen surprisingly often.

Investors know this as “tailend risk”which you can price and sell. Nassim Taleb, the author of the bestseller The Black Swan, has made a fortune selling options on tailend risks. His point is that the straight-line inferences most

We are very poor at assessing how likely the very unlikely is – and it happens more often than we expect traders make, based on the news of A leads to B leads to “buy”, is meaningless, so he sells bets on very unlikely events. These do not come up often, but they do come up more often than most people expect, making Mr Taleb a very rich man indeed.

There remains a conviction that, given enough information, an analyst can say for sure what will happen next.

The trouble is that the world doesn’t work like this. Quantum mechanics shows the universe is intrinsically unpredictable, as enshrined in the Heisenberg uncertainty principle. You cannot know anything precisely.

Emerging-market investors are good deal better at dealing with Black Swan events, as they are used to this unpredictability. They focus less on risk and more on growth and opportunity because, unlike their peers in the West, emerging-market investors are not surprised when something goes wrong.

LONDON BLOG

Reaching the Moon on the shoulders of giants Stephen Dalziel

Russo-british chamber of commerce

T

he decision by the British Council to unveil a statue of the world’s first spaceman,Yuri Gagarin, in London rights a wrong born of the Cold War, which has long outlived that era.

Generations of British (and even more so, American) schoolchildren have grown up in the belief that the United States has always led the way in space exploration. The reality is very different. Okay, the US has the big one: as the first (and to this day, only) country to put a man on the Moon.

That is, of course, a massive achievement, bettered only by that of bringing them safely back to Earth again. But if that is the pinnacle of man’s achievements in space, most of the steps leading to the summit were trodden by Russians, and the occasional other Soviet nationality.

On October 4, 1957, the USSR put the first manmade object, Sputnik, into orbit around the Earth.

From that point until the Americans landed on the Moon on July 20, 1969, the most significant steps forward were all Soviet.

The first living creature to be put into orbit around the Earth was a Russian dog, Laika, a month after Sputnik. The first man in space was Yuri Gagarin, 50 years ago, on April 12, 1961. (The unveiling of his statue in July 2011 will mark 50 years since Gagarin came to the UK.) A little over two years later, on June 16, 1963, another Russian,Valentina Tereshkova, became the first woman in space. Within a further two years, on March 18, 1965, another space record had gone to the Soviet Union, when

Alexei Leonov became the first man to go outside his capsule in space on the first so-called “space walk”. And even after the US Moon landing, another noteworthy milestone went to the Soviets with the launch in April 1971 of Salyut 1, the first space station.

So why, almost 20 years after the collapse of the Soviet Union, could most British schoolchildren have told you that 2009 marked the 40th anniversary of man landing on the Moon; but not that 2011 marked the 50th anniversary of the first human spaceflight?

Firstly, old habits die hard.

While few people nowadays would admit to having an openly hostile, Cold War attitude towards Russia, for many Britons there is a natural cultural and historical

How is it that British children can date the US Moon landing, but not the first human spaceflight? affinity with the US. Secondly, space exploration in Soviet times was considered to be a part of the country’s military programme, so few details of Soviet space flights were ever revealed. Nor did the Soviet programme introduce and develop as many tangible day-to-day benefits as its US rival did, such as smoke alarms and TV satellite dishes.

But be it home comforts or more accurate weather forecasts, man’s exploration of space has not only improved life on Earth but taught us more about ourselves, about our species’ courage and endurance.

So, when Gagarin’s statue is unveiled in London this summer, may it give people pause to marvel at all of those pioneers who pushed back these shared boundaries.

06

Comment & Analysis

Russia now www.rbth.ru

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section sponsored by rossiyskaya gazeta, russia Distributed with THE daily telegraph TUeSDAY_APRIL 19_2011

YOU SAY YOU WANT A REVOLUTION? Dmitry Babich

ria novosti – SPECIAL to RUSSIA NOW

niyaz karim

W

hy aren’t Russians brimming with admiration for the Arab revolutions? I have heard this question at least 20 times in the past three months. It came from BBC journalists interviewing me; from Western university professors lecturing Russian students; sometimes even from West European diplomats.

Somehow, we Russians (according to others) are never supposed to be free. A refusal to see our condition as anything but the most miserable of states crying for an immediate new revolution is seen at best as resignation before evil; at worst, as a gross injustice.“Don’t you want to have the same freedom as Tunisians now have? How rotten of you not to want it!”This was a question with a readily attached answer from a friend of mine, a British journalist whose every report from Moscow starts with the words, “In another blow to Russia’s democracy…”

No, I don’t want to be one of those 25,800 Tunisians currently waiting for the Italian government to decide their fate as illegal immigrants on the island of Lampedusa. We Russians have learnt the hard way since 1917 – or maybe even since 1789, when the first refugees from the French Revolution started coming to Russia – that a revolution’s quality is best defined by migratory flows.

Having overthrown the tsar's autocracy in 1917, millions of Russians suddenly found themselves in the situation of émigrés, enduring such humiliations that the tsar’s“humiliating”rule seemed a paradise lost in comparison.

Worse still, those who stayed in Russia, and found themselves under Lenin and Stalin, envied their relatives who

Nato action in Libya seems to be based more on hope than on actual knowledge of the situation had left. So, if the wind of change is so sweet as the European press describes it, why are so many people now fleeing North Africa?

But this is a different kind of revolution, my British reader will tell me, one that is not about Communism but freedom. My answer will be: how do you know which form the now flowing Arab lava will take? To the tune of heated debates about a few hundred niqabs in France, a longtime ban on this sort of Muslim dress was lifted in Tunisia and Syria, and I wouldn't be sur-

prised to see hundreds of thousands of them appear.

Why? Because Tunisia, for example, which was expected to post economic growth of 4-5pc this year, will actually muster no more than 1pc – not a good time to have to find work for 80,000 young college graduates who will join the labour market this year in Tunisia alone. Consequently, the heightened expectations of the young are going to clash with reality, and then we shall hear the familiar slogan: “Islam is the solution.”

Much has been written about the “conflict” between the Russian president and his prime minister over the Libyan problem. In reality, their two approaches reflect the complicated nature of the problem, which only self-assured ignoramuses could deny. Dmitry Medvedev explained why Russia did not

block the UN Security Council’s resolution on helping Libyan civilians, while Vladimir Putin expressed his doubts about the ease with which Western nations resort to force in humanitarian interventions.

Aren’t there grounds for such doubts? Hope is not a strategy, as American president Barack Obama rightly said recently, and Nato action in Libya seems to be more based on hope than on actual knowledge of the situation.

The hope, obviously, was that Colonel Gaddafi’s defences would collapse with the first news about French air strikes.

The hope was unfounded. But now Nato members are disqualified from working as intermediaries in the Libyan conflict. Would it help if Russia and China, as well as Brazil, disqualified themselves from this role too, by giving

Unlocking Russia with a swedish key

their full support to resolution 1973?

One may try to acquit the “French George Bush,”President Sarkozy, by his not having sufficient information on Libya. But who is to blame for Nato and the EU having such sketchy intelligence about the life of their close African neighbour? How did a situation arise where the French president recognises the National Transition Council in March 2011, while the identities of two thirds of its members were still a mystery?

Of course, establishing contacts with the Libyan opposition during Gaddafi’s rule was hard; talking to the“star” of the Russian opposition, Boris Nemtsov, in a fancy Moscow restaurant is much easier. But isn’t it the responsibility of governments and media to see real leaders and threats instead of invented ones?

The European press and the EU’s policy planners failed the Libyan exam horribly, concentrating on imaginary threats for decades. It is enough to recall the sheer amount of stories written about how to respond to Russia’s eventual decision to cut gas supplies to the EU.Whole institutes and policy centres made their living on such plans. But I don’t remember a single story or policy plan discussing a cut in energy supplies from Libya.

Russians learnt the hard way to appreciate the wisdom of the words of philosopher Joseph de Maistre, a refugee from the French Revolution who lived in Russia in the early 19th century:“Revolutions happen because of the government’s iniquities; but no government iniquity is as bad for people as revolution itself.”The West seems to have forgotten its own wisdom on revolutions, despite the pain of its original acquisition.

Svetlana Smetanina

special to Rn

H

istorically speaking, Russia has never received especially rave reviews from those intrepid travellers who journeyed here from the West. Memoirs of Russia over the centuries have been rife with epithets like “wild and barbaric”,or“mysterious and strange”. At the same time, every second book about Russia claimed to be the first to reveal this remote and unknown country to foreigners. For example, in the preface to his Russia in 1839, the Marquis de Custine gave the impression that before him no Westerner had set foot in this “bizarre country” and experienced this“utterly unknown society”.

An age has passed since Custine made his way to the frontiers of Siberia, but the picture of Russia abroad remains essentially the same.

“People in the West know astonishingly little about Russia,” writes Lennart Dahlgren, a Swede who worked for close to a decade in Russia as the head of IKEA.“We tend to take the stereotypes about this country as the reality. We have an outdated mould with which we try to cast our image of Russia, when it is made up of a mosaic and is constantly changing.”

Dahlgren, too, has published a memoir: Despite Absurdity: How I Conquered Russia While It Conquered Me. Anyone expecting another manual on how to succeed in sales will be disappointed. The book, published last year in Swedish and Russian, contains nary a word about business. Its value lies rather in its attempt to explain why one would do better not to approach Russia with the standard set of myths and stereotypes.

“Those who call themselves Russia experts usually don’t understand the first thing about it,” writes Dahlgren.

“People who say they don’t know much about Russia come much closer to understanding it.”

Like most of IKEA’s managers, Dahlgren began with a distinctly negative attitude towards his host country, the result of negative information in the media. When he first came to Russia on a business trip in the early Nineties, he brought two boxes of children’s clothes for the throngs of poor Russian children supposedly roaming Red Square. One evening, he and a friend set out for the square, intent on bringing happiness to those local ragamuffins. How surprised and even disappointed they were to find the children they met were well-dressed and mostly ac-

Dmitry Babich is a political analyst for RIA Novosti.

special to rn

niyaz karim

A

s the old Russian saying goes, you don’t take a samovar to Tula – just as you don’t take coals to Newcastle. These simple truths also work for geopolitics.

It would be untrue if we said Russian diplomats have stopped taking their “samovars” on diplomatic trips.

And yet it is precisely this approach that helps them emerge unscathed in difficult situations, or even elicit a warm welcome, especially in the Islamic world.

Almost one month ago, on March 21, I accompanied Sergei Lavrov, the foreign minister, on his trip to postrevolutionary Egypt. Our first visit was to the Arab League headquarters at the corner of Tahrir Square – a name now known all over the world.

The barricades were removed two days before, but the city was still far from quiet. I got out of the car some 20 yards away from the Arab League building and just five yards away from a crowd of people shouting something in Arabic. European-looking reporters immediately attracted the demonstrators’ attention. “Beat them!” shouted one, and the crowd moved towards us. Luckily, one of the protestors asked in English: “Where are you from?”

When we said that we were Russians, the crowd stopped.

resounded to chants of “Shame on Sarkozy”and“No bombing sovereign states.”

The Egyptian crowd Five minutes later, I saw the crowd throwing eggs at the threw eggs at the motorcade of UN Secretary motorcade of UN General Ban Ki-moon leavSecretary General ing the Arab League headquarters. But this same crowd Ban Ki-moon, but stepped aside to let through stepped aside to Sergei Lavrov’s limousine let through Sergei with the Russian flag.

Lavrov's limousine One can elaborate endlessly with the Russian flag on why Muslims treat Russians differently to, say, the “We won’t touch Russians,” French, British or Americans. one of the demonstrators ex- To cite just one example, let plained to me. “We thought us consider the attitude of you were French or English, the Quartet of Middle East we’d kick their a*** for peace mediators towards Hamas. In late January 2006, Libya.”

As it turned out, the crowd this radical movement, which was angered by the interna- many in the West still see as tional coalition’s bombing of terrorist, won elections and Colonel Gaddafi’s positions received a parliamentary mathe day before, and the air jority in the Palestinian au-

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tonomy. While international observers failed to find any significant voting irregularities, neither the United States nor the European Union recognised Hamas’ victory, refusing to negotiate with the representatives of this movement.

On the contrary, Russia chose to respect the will of the Palestinian people. “As for Hamas, we maintain ties with this movement now that a significant part of Palestinians voted for it in the election recognised by all as free and democratic,” Mr Lavrov stressed. “To solve the economic problems of Gaza, we have to co-operate with Hamas on a daily basis. This is a complicated process, but there will be no results if we do nothing.”

The West used to criticise Russia for supporting “terrorists” when it received Hamas leaders in Moscow, but it emerged last year that European diplomats also made direct contacts with Hamas. Apparently, they realised that any progress in the Palestinian-Israeli conflict is unthinkable if we ignore the opinion of the majority of Gaza’s people. In other words, Moscow was right to urge its European colleagues to take a more differentiated approach.

In Egypt, meanwhile, Mr Lavrov stressed:“Russia has no right to quarrel with the Islamic world, let alone to be dragged into such quarrels.

I am sure that the choice of Russia and other leading na-

tions, including such geopolitically important countries as China and India, in favour of unifying policy shall be the main factor, and a guarantee that the world will not be split between civilisations,” he said.

What is happening today is that the West is losing its monopoly on globalisation. As the foreign minister said, it is perhaps for this reason that some people are tempted to interpret the current events as a threat to the West and its values and lifestyle. However, he added, “When such conclusions produce attempts to split the world between the so-called civilised humankind and the rest, this is fraught with the risk of global catastrophe.”

On the return flight from Cairo to Moscow, I asked a top-ranking official from Mr Lavrov’s team whether we might have done better to support the international coalition in meting out the toughest possible response to Gaddafi? If only to improve our relations with the West.

“Are you proposing to send Russian planes to bomb an Arab League country?”he replied. “We once made that mistake in Afghanistan, and we all know what happened.

We won’t do that again.”

Sometimes it takes simple geopolitical logic, like the samovar, to boil things down to their essence.

Vladislav Vorobyov is foreign policy observer at Rossiyskaya Gazeta.

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companied by parents. Cold and exhausted, the Swedes began to force their goods on anyone who would take them. Most people politely refused, but one person threatened to call the police.

Dahlgren never brought another box of second-hand clothes to Russia again.

Nor was business smooth sailing at the outset. IKEA managed to launch stores in Russia only on its third attempt. The first was derailed by the collapse of the Soviet Union in 1991, the second by the 1993 conflict between the Russian government and parliament. Third time around in 1998, just as construction was about to begin on the first store, the rouble collapsed. You would think that, from the point of view of Western logic, one should simply drop notions of doing business with such a country. Western logic, however, doesn’t work in Russia. But the old Russian saying does: “Nothing ventured, no champagne.” Dahlgren’s experience convinced him of this.

Much of his account concerns the long-running tugof-war between IKEA and local authorities in the Moscow region. The Swedish company was supposed to build a bridge over the Leningrad Highway so that customers could get to the store more easily. First it received permission to build the bridge, then permission was withdrawn. Soon traffic on the highway was backed up for miles and the on-off bridge was back on again – but in the wrong direction.

Dahlgren does not say so in

Those who call themselves Russia experts usually don’t know the first thing about it. People who say they don’t know much about Russia come much closer to understanding it so many words, but he implies that the problem could have been easily solved with money. It is no secret that the local authorities in many regions of Russia see the arrival of a major Western company as one way to beef up the local budget. IKEA ended up having to contribute $5m (£3.1m) to the development of children’s sport in the Moscow region.

Of course, only a very large concern has the confidence necessary to engage in a protracted battle with the local authorities. Others often give up and abandon the market.

IKEA persisted and here’s the result: in less than 10 years in Russia, 13 gigantic malls were opened in 10 cit-

ies along with an enormous distribution centre, and three manufacturing complexes began operation.“Where else could you achieve such impressive results over such a short period?”asks Dahlgren.

Incidentally, it was in Russia that IKEA tested its new business model. It began opening not just furniture stores, as in other countries, but enormous shopping and entertainment complexes.

Their success exceeded all expectations: the first complex became the most visited in the world just two years

For foreigners, there is a huge temptation to live as one pleases, and then to attribute any failures to the ‘horrors of Russian reality’: the mafia, corruption, pressures, threats after it opened, with 50 million visitors annually.

Having lived in Russia for a decade, Dahlgren found an explanation for Russia’s negative image in the West: clearly it is in someone’s best interest. “I noticed fairly quickly that many Western businessmen in Russia lead a merry life full of affairs with Russian beauties and wild drinking sprees – this hardly promotes success in business.”

So what do these über-relaxed businessmen do?“There is a huge temptation to live as one pleases, and then to attribute any failures to the ‘horrors of Russian reality’: the mafia, corruption, pressure, threats,” writes Dahlgren. The boss will think that his poor underling was knocking himself out under inhuman conditions, forgive the losses and pack him off to a calmer country for a rest cure.

Social benefits for staff in the Russian offices of Western firms are substantially higher than for staff in offices elsewhere.

But the fact is that anyone can get what he wants from Russia, be it pleasure and entertainment, fantastic profits or a murderous headache.

One thing is certain, concludes the Swede: “You can love Russia or you can hate it, but you can never remain indifferent.”

“I know for a fact that I will always miss that crazy space full of love, without fully understanding why,” Dahlgren says. “Russia is a drug and I’m addicted to it.”Now that’s love – Swedish-style.

Svetlana Smetanina is a freelance journalist and former staff writer at Kommersant, Gazeta and The Moscow News.

niyaz karim

Logic of Samovar diplomacy Vladislav Vorobyov

Managing Russia’s pragmatic idealists: Alexander Arkhangelsky http://rbth.ru/12677

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07

Migrants A growing number of our people are choosing to relocate to Britain. But who are they? And why do they remain such an enigma to the Brits?

New wave of Russian expats washes up in ‘Londongrad’ Fathoming the second influx of the UK’s Russians RN: An increasing number of Russians are moving to Britain, especially London, for the long haul. And they are ready to spend: so much so, that British economic commentators say that if the Russian money vanishes, there’s going to be one heck of a gap.

So, just who are these Russians putting down roots in Britain? Lucrative clients and investors? Murky businessmen? Or regular neighbours who just happen to live next door in Britain’s multicultural melting pot?

Seva Novgorodtsev: The British have experienced several generations of Russian emigrants since the Seventies.

[Then] there were probably 100 Russians in London, and they were such a rarity that the locals would come up and touch them. We then started seeing people arriving here, mostly intellectual dissidents, scientists, artists and musicians.

Chekhov holds such an appeal in the UK because the British were nostalgic for their own lost “Cherry Orchard” [legacy of heritage].

Ironically, some of the more recently arrived Russians were the same energetic merchants who cut down those orchards.

Now we see a new wave of Russians here, a second generation who studied in the UK, are highly skilled and bior even trilingual. They are a smart lot – lawyers, insurers and other successful professionals, and you can’t tell by looking at them that they are Russian until you hear them speak the language.

These are people who are totally international: they could work in any country and can go back to work in Russia for foreign or Russian companies.

And if we are talking about what Britain gave to the Russians or vice versa, it is this generation we should be concentrating on: they can function as a link between the two countries.

Shirley Humphrey: Harrods Estates have been dealing with Russian clients for the last 15 years, and our perceptions of Russian people have changed dramatically over this time. There used to be people coming to buy property here with suitcases full of money, which we were not allowed to take – we have strict anti-money laundering regulations.

On both sides there was an element of mistrust, and perhaps there were many cases of Russians being treated unfairly by unscrupulous agents, and cases when, on hearing a Russian accent, the selling price would go up.

Katerina Ukhankova: I own a company that helps wealthy families from Russia and former CIS republics take up

RN: At the same time, it’s a fact that these rich Russians are the ones who drove Britain’s already pricey property market through the roof.This has presumably not gone down too well among the British.

Mark Hollingsworth: The Russians are far from the only ones to heat up the market; look at the Kazakhs, Chinese, Americans and Arabs.

Katerina Ukhankova: According to figures published in the British media, in terms of property purchases, Russians are only in fifth place, behind the Chinese, Indians, Malaysians and Saudis.

But today we’re not just talking about rich people from Russia: there are lots of Russian students here, and local universities are happy to take them in, not just because they pay for tuition, but also because they usually study well and raise the university’s rating with their high marks.

I’ve met some highly talented Russians in the UK, and the majority of them can speak multiple languages and adapt perfectly to the local culture.

I even get the feeling sometimes that perhaps Russia’s most gifted and intelligent people have all emigrated. If that’s the case, it’s extremely sad.

Oksana Morgunova: I believe that we are currently witnessing the formation of a new national minority in the UK. More and more Russians are arriving here with both British and Russian passports.

The number of Russians who were born and educated in the UK is growing, and the question arises whether or not to remain in this country after receiving a diploma, or return to the motherland.

This is extremely difficult to answer, because it’s a superflous question.They don’t“remain” anywhere – they can work simultaneously both here and there, or in some other country. The world’s younger generation has become very receptive to this way of life.

Preserving 'Russian-ness' can be an anxious affair RN: Everyone in the UK who is interested in the Russian “diaspora”notes that immigrants from Russia emphatically refuse to set up their own residential districts, and make every effort they can to live as far apart from each other as possible. Thus, while it’s well known that hundreds of thousands of Russians live in London, nobody has any idea where they live exactly.

How can this phenomenon be explained?

Around the table FRANK ALTHOUSE Director, Russian Language Centre OLGA BALAKLEETS Ensemble Productions VASILINA BINDLEY Executive director, Willis Ltd JULIAN GALLANT Director, Pushkin House Russian Cultural Centre PAUL HALLORAN Writer and publisher MARK HOLLINGSWORTH Co-author of Londongrad – from Russia with Cash SHIRLEY HUMPHREY Director, Harrods Estates WILLIAM MACDOUGALL Director, MacDougall’s Auctions DR OKSANA MORGUNOVA Co-author of Russian Presence in Britain SEVA NOVGORODTSEV BBC broadcaster SERGEI PAVLENKO Artist KATERINA UKHANKOVA Director, Kalido Private Office

REX/FOTOBANK

has this society enriched them? In order to answer these and other questions, Russia Now canvassed the opinions of several seasoned “Russia watchers”in a recent round-table discussion at London’s Pushkin House Russian Cultural Centre.

residence in the UK. I can confirm that the Russian clients have become more civilised and“transparent”.In fact, there are no longer any suitcases filled with cash.

And while most local banks still consider Russia a highrisk country, Russians have a much easier time today undergoing all the checks the UK financial institutions put them through.

Most of the leading local banks, large law firms and estate agents now have special Russian departments to make sure the rich Russians get higher quality service.

Giant matryoshka dolls take a spin on the London Eye for the opening of the Russian Winter Festival held at the South Bank Centre in January 2008

THE NUMBERS

£310

million – amount spent annually by Russian tourists in the UK

111

The number of Russian students enrolled at London’s prestigious LSE in 2009-10

241 RG

CONTINUED FROM PAGE 1

By royal appointment: Sergei Pavlenko with one of his portraits of the Queen

Mark Hollingsworth: One of the biggest revelations for me, while I was researching my book, was the Russian obsession with secrecy at all levels of society, that is what causes a major problem for the Russian image abroad.

Julian Gallant: What we in Britain probably do not appreciate about Russians is that they are always anxious about the uncertainties of the future, irrespective of their financial position and living standard.

Shirley Humphrey: Russians are more discreet than many other nations – they tend to keep their important dealings very discreet, and will often bring their own interpreters [to be doubly sure].

Seva Novgorodtsev: I recently heard two little Russian girls outside their £12m house in Mayfair talking on the phone to their father who is in Matrosskaya Tishina [a Russian prison] and who is never coming out. He used to be a politician and an oil magnate and was arrested on trumped-up charges: he lost and landed a life sentence.

The house is still there, the daughters are growing up but he is in prison. That’s why Russians have to be discreet.

This money carries a price tag.

Julian Gallant: And yet Russians are drawn to each other in London. They mainly socialise at church and various cultural events.

In my view, one of the biggest problems facing the Russian expat community is that they have nowhere to teach

their children Russian. They can only take their children once a week to one of the Russian schools that have been set up by genuine enthusiasts and volunteers who devote their time and efforts to preserving the Russian language and Russian culture in the UK. One such school is located at Pushkin House in London.

Olga Balakleets: Cultural events with national colouring are extremely important for Russians living in the UK. It would be wonderful to see wealthy Russians supporting Russian cultural events, Russian community events and some dedicated Russian charities in the UK. However, with a few exceptions, we are far from receiving enough support from our rich compatriots.

Vasilina Bindley: Russians do get together for various cultural events all the time. Go to a concert of [classical pianist Evgeny] Kissin and there will be plenty; go to a KVN [Soviet-style comedy/ talent competition] show and you’ll find a thousand. The Sovremennik Theatre tour was sold out, as was the Mayakovsky Theatre tour.

In the City of London, where thousands of Russians are employed in business and finance, there are several professional associations and clubs, such as the Anglo-Russian Legal Association, the Russian MBA Group, the Russian Banking Group, and the Russian Insurance Club.

If you go to a Russians in the City [club] event, you will see

hundreds of Russian professionals making the most of networking opportunities.

Images of oligarchs on the run, spies and blondes...

RN: We have been discussing the visible presence of talented Russian professionals and diligent students in London, yet in the view of most Britons, the Russians who come to their country are either fugitive oligarchs with dodgy money, call girls or spies of every kind. Where does this image come from?

Sergei Pavlenko: Russians have always been looked at differently, there is still some political angle here...

Paul Halloran: The generation of Russians who came here in the early Nineties are not the same as the Russians who come here now. The latter group is a lot more savvy and is less exploited.

I have been around Russians a long time, and have come to the conclusion that there is no such thing as a Russian heart: they just have a community of interests.

People who come here from Russia and do well work hard, and people who come here from Russia with money are no different from those coming from Arab countries or China, or any other nationality.

Russian illegals are not a

thousand Russians visited Britain in 2010 – both on business and as tourists

problem. Russians assimilate quickly and you do not see many of them working in kitchens and restaurants.

Mark Hollingsworth: With the new generation of Russians coming here, the real issue is the difference in [the British] perception of Russians and other nationalities. It is Russian oligarchs and Russian mafia [who form the stereotype], and so the problem is one of perception and reality.

As Paul indicated, 99.9pc of Russians in the UK are hardworking professionals. The problem is that if you talk to educated and reasonably informed British people they immediately think of Russian mafia, oligarchs and [Alexander] Litvinenko…

Everybody joining in: ...and Anna Chapman and blonde Muscovites called Masha!

Mark Hollingsworth: The problem is the perception. There are only very few oligarchs who came here to hide from prosecution. They are fugitives and they do not even create any business or revenue here; they are just financial engineers, simply hiding their money here, and the key reason is security, partly psychological.

Frank Althouse: I have been teaching Russian for 20 years, and we are in danger here of misunderstanding how the perception of Russia among young British people now is very different from that of the generation of the Seventies.

I notice that when we teach Russian to young British lawyers, they go to Moscow with

Londongrad – From Russia with cash “Russian oligarchs have also breathed new life into one of Britain’s oldest industries: yacht building. After refitting Roman Abramovich’s yacht Pelorus…

Terence Disdale found himself inundated with new orders and even had to turn some clients down. According to Jonathan Beckett, managing director of Burgess Yachts, the Russians have ‘taken the yacht business by storm. From 10 to 20pc of our clients are Russians.’

“In early 2008, Disdale said that people from Russia probably do not dominate the world market, but ‘they are the biggest spenders. They want the very best design and materials. On the chartering market, they lease the very biggest and very best vessels for the longest periods of time. The Russians will charter

a vessel that costs $100,000 a night, whereas the Americans will settle for a yacht that leases for $40,000 a night.’

“The advent of this gigantic geyser of foreign money has launched new industries and spawned huge profits while turning London into an immense club for those who can afford the membership fee. New jobs have appeared... chauffeurs, bodyguards, and gardeners are suddenly in great demand. London now boasts more butlers than it had in the time of Queen Victoria. Abramovich employed 28 servants at his Fyning Hill estate alone, while Oleg Deripaska’s mansion on Belgrave Square was swarming with attendants all year round, though he rarely lived there himself.”

Mark Hollingsworth

a totally different view of Russia. In the past, young people going to work there would have been briefed about the hardships and peculiarities of working in Russia. Now they go to work in Moscow as they would go to work in UK. As the experience of foreigners in Russia normalises, so does the reputation of Russia and Russians.

some artists started to believe they could paint and sell anything. But people in the West aren’t fools.

Sergei Pavlenko: To succeed in the West you have to work hard, but not everyone wants to.

Russian place called brushstrokes A captured the ‘Londongrad’ RN: There is no such concept as “Parisgrad” or Queen “NewYorkgrad”,while“LonOlga Balakleets: We have a unique person sitting with us, Sergei Pavlenko, who painted [a portrait of] Queen Elizabeth. For the Queen, the nationality of the artist doesn’t matter, as long as he or she is a true professional.

Sergei Pavlenko: Out of 100 leading portrait painters in the UK, at least 50 are foreigners, foreign trained or foreign born.

William MacDougall: I imagine that English art schools no longer teach the skills of portraiture.

Sergei Pavlenko: Russian art schools have the same problem: some that were once famous for this are now going downhill.

When the gates opened to the West there was a lot of interest in Russian art, and

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dongrad”exists. What is the magnet that draws Russians here?

Paul Halloran: In France, you need three months to set up a company; in London you could do it in a day, even over the phone. The judiciary is independent, financial services are extremely well developed. Education for their kids is good, and the British are very nice people.

William MacDougall: It may be a generalisation, but it is also completely true, of course. I would add that Britain is a good place to be from a tax point of view.

Katerina Ukhankova: Britain is a safe place and a “fashionable” country to live in, while London is a world financial centre. So little wonder so many Russians choose “Londongrad”.

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Theatre A new breed of realist dramatists has surfaced to take on the Moscow mainstream

EMMANUEL GRYNSZPAN RUSSIA NOW

On an intimate Moscow black-box stage, four actors read their parts, including stage directions, from the scripts in their hands. They frequently look directly at the audience (the first row is only inches away). Slowly, the reading turns into performance. The tension builds as the actors transform into characters – four young and aimless drunkards. The audience appears both shocked and amused by the crudeness of Zhizn Udalas (Life Smiled at Me) which employs language unheard of in local theatres.

A cluster of young Russian playwrights armed with razor-sharp tongues and a hunger for realism is charting new territory on the Russian stage, bringing a fresh lustre to the country’s theatrical reputation with its “New Drama” movement. Their theatres are small and their themes are gritty, and they are attracting daring talents and lively audiences.

Teatr.doc, which produced Zhizn Udalas, is best known outside Russia for performing a play about the life and death of lawyer Sergei Mag-

directors ignore it? “Theatre must be contemporary. Theatres are suffocating under the old plays, but they slam the door in our faces,” thunders Marat Gatsalov, an actor and one of the movement’s leading directors. Mr Gatsalov directed this production of Zhizn Udalas, and the highly acclaimed Odds and Ends before it.

“Contemporary” is a word that reappears like a leitmotif with this breed of playwright. After a March performance of her play Mixed

Playwrights with razor-sharp tongues and a hunger for realism are charting new territory Feelings, Ukrainian dramatist NataliaVorozhbit offered her definition of New Drama as “people who write about the contemporary world with a contemporary outlook and language. We are not afraid of provoking. Our writing must be emotional.”

Reluctant politics

Don’t go looking for politics in most of these dramas, however. The Magnitsky play is more the exception than the rule. In spite of the dissent at the core of the movement, its writers so far reject open confrontation with the

establishment. “Politics doesn’t interest me,” Ms Vorozhbit says awkwardly.

Then, after a pause, she acknowledges: “A part of me feels ashamed for not writing on this subject. In fact, without having really discussed it between ourselves, I think we consider the topic too dirty to mention.”

The idea seems paradoxical, given New Drama’s fearless treatment of taboos (at least in Moscow’s theatres), such as drugs, prostitution and homosexuality.Yet despite – or perhaps because of – the otherwise risque subject matter, a loyal audience is growing, and wider recognition may be in the wings.

New Drama has established its presence at an astonishing rate of one to two new productions per week, carried out with absolutely zero financial backing but with a growing confidence that the movement has broken through. The Golden Mask bestowed on Zhizn Udalas would seem to say so. “The Golden Mask festival is a showcase for the big state theatres, but they still gave us the best award last year and some nominations this year,” says New Drama author Mikhail Ugarov.

“This recognition from them is a clear signal that New Drama is penetrating the mainstream.We are the mainstream now.”

Passover Russia’s Jews uphold an age-old baking ritual

Matzo in Moscow: the religious rite that Stalin couldn’t break Through repression and revival, Russia’s Jews maintained the matzobaking rites of the Passover to commemorate the Exodus.

MASHA FOGEL

REUTERS/VOSTOCK-PHOTO

SPECIAL TO RUSSIA NOW

When Israeli prime minister Benjamin Netanyahu visited Moscow last month, the food he enjoyed at the Kremlin was as kosher as it comes, the result of staunchly upheld Jewish tradition – and terrible sacrifice.

“My grandfather was executed in 1950 in Leningrad by the Soviet state because he made matzo, the flat unleavened bread eaten by Jews, instead of leavened bread during the eight days of Passover,” says Rabbi Yitzak Kogan, who heads Moscow’s main Lubavitch synagogue, and whose son was tasked

by President Medvedev with serving authentic dishes to the visiting Israeli premier.

While Orthodox Christians bake their own traditional fare at Easter, Russia’s 223,000 self-identified Jews (2002 census) will, from the April 19 start of the Passover, break the bread of ages that is matzo to mark the

In the past, the baking of matzo endured strict repression

While Russia’s Christians bake their Easter fare, the Jews break the bread of ages that is matzo Jewish flight from Egypt.

Since Mikhail Gorbachev’s perestroika reforms of the mid-Eighties, the religious life of the Jewish population has risen from the ashes, and with it, openly baked matzo from the oven. Mass immigration to Israel and the US

after 1991 delayed the full revival that came with the economic turnaround in the early 2000s. But today, the Russian capital is home to 15 synagogues, up from just two during the Soviet era.

Passover rites were among rare pieces of cultural heritage passed down within the Jewish community in Soviet times, note stalwarts of the faith. “When I was a child, people would go to (Moscow’s) Choral Synagogue, which was the only one functioning,” says Rita, Rabbi Kogan’s secretary.“We’d line

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New Drama production Life Smiled at Me pulls no punches as it reveals the seamy side of modern existence

QUESTIONS & ANSWERS

‘A living, breathing, misunderstood process’ between filming and treading the boards of with Teatr.doc.

Do you feel you are a part of New Drama?

I joined the movement not long ago. Everything started when I acted in Boris Khlebnikov’s film Free Floating [2006], the screenwriter of which was [New Drama director] Alexander Rodionov. I made new connections with extremely talented people.

I’m very aware and stay in tune with the movement – it’s excit-

Actress Darya Ekamasova graduated from Moscow's prestigious Academy of Theatre Arts (GITIS) in 2007 and now divides her time

ing work for an actress.

Is it more stimulating to act in a New Drama play than in a big Moscow theatre production?

For me, the most important thing… is the text. I have a voracious appetite for interesting and complex roles. Unfortunately, they’re rare.

Who are your favourite playwrights at the movement?

My favourite authors are Kurochkin, Ugarov, Durnenkov, Gremina, Rodionov and Bondarenko. Something deep is emerg-

ing from them. Most of all, I appreciate plays where the writer doesn’t try to overdo it with airing dirty laundry… It seems that some writers compete to see who can use the worst language, the foulest expressions, etc. There’s a branch of New Drama that is going in that direction and it's not for me.

Can you define New Drama?

It’s an entirely new movement that still doesn’t have a well-defined scope. The only clear definition is that it doesn’t have a kopek to its name. Beyond that, it’s a living, breathing and largely misunderstood process.

Easter Russian Orthodox dishes test an expat chef’s mettle

up on a huge staircase with our own sacks of flour, and at the top, Jews would be making matzo in silence.”

At the tail end of the Stalinist repressions, families still came together for the two first nights of the Passover and for the forbidden bread.

The bolder ones would invite guests, despite the lingering danger of arrest.

“My family welcomed everyone who wished to hear the Hebrew recitation of the Exodus from Egypt – during Passover, the door stayed open all night, something that was still a danger in the Fifties,” recalls the Yiddishspeaking rabbi, who sports a long white beard and the traditional black hat of the Lubavitch Hasidim.

Today, Rabbi Kogan’s synagogue, which is located a few hundred yards from the Kremlin, welcomes 800 people for the Passover meal.The Choral Synagogue receives around 1,000 people on the holy day, somewhat to the dismay of more fastidious worshippers who insist that much has been lost. “It isn’t a good thing, really,”Yitzak Lifshitz, the head of the synagogue’s kosher food service, says of people congregating at the building – rather than people’s homes.

“The Passover celebration is a family event, representing an essential occasion for conveyance between parents and children, where the parents explain the history of the Jewish people. These days, many people have forgotten how to celebrate it, which is why they come here.”

So you’re a budding expat in Moscow. How will you approach your life there? A few typical types of Moscow expats are revealed.

No Russian revolutions are anticipated over the next few years, at least in part because Russia lacks a consolidated protest movement.

Magical recipe pulls rabbit from the tomato tin Baking should be a piece of cake in this modern age of kitchen appliances – but you try conjuring up a crumbperfect kulich this Easter...

JENNIFER YEREMEEVA FOR RUSSIA NOW

Orthodox Easter cuisine in Russia keeps pace with the liturgy’s potent symbols of resurrection: the triumph of light over darkness, and the return of spring.

During Holy Week, Russians bake a light, dry traditional Easter cake, called kulich, and colour and decorate hardboiled eggs, and take it all to their parish church for a Paschal blessing. Together with a rich, creamy moulded curd cheese, spiked with spices, candied fruit and citrus zest called paskha, these are the fundamentals of the Easter meal that is served right after a lengthy Church service. It culminates in the joyful Easter greeting“XristosVoskres!” (“The Lord hath risen!” )to which the faithful respond, “Verily, He is risen!”

As an American living in Moscow, I remember my first Russian Easter as a frantic hunt, not for eggs and chocolate, but for bakeware. Although I now have a sizeable arsenal of pots, pans, dishes and other baking paraphernalia, none

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nitsky (who died last year in police custody), giving a voice to civil discontent. The group also staged a play based around internet reactions to the horrific 2004 school siege in Beslan.

Zhizn Udalas has been awarded a Golden Mask Award. The Golden Mask Theatre Festival is Moscow’s premier theatre event. It runs each year from March to April, closing with a showcase for cutting edge work, called the Case Festival.

Some foreign theatregoers may think the nation that gave the world Chekhov and Gogol has rested on its laurels in recent years. But whatever collapse of confidence and creativity occurred in the Nineties has been replaced with something worthy of Konstantin Stanislavsky himself.

Every night, roughly 30 theatregoers enter the tiny basement of Teatr.doc, which already has a cult following in Moscow. Here, a conspiratorial air hangs over the minimalist décor, and a near tangible chemistry occurs between the actors and audience.

Like the Bauhaus, the theatre’s maxim is,“Less is more.”

And, sure enough, New Drama is driving a crack through the ageing facade of Moscow’s main street theatres.The question now is: how long can Russia’s best-known

ITAR-TASS

Moscow’s emerging “New Drama” theatre movement is shocking and delighting audiences with a broadside of rough realism.

MICHAIL GUTERMAN

True grit causes a real stir on the contemporary stage

Find kulich and paskha recipes at www.rbth.ru

Crumbs of comfort: the traditional kulich Easter cake

of them is suitable for Easter confections. I wanted to do it right and produce a real kulich cake that was tall and cylindrical with a slightly puffy cap, and a paskha using an authentic trapezoidal mold called a pasochnitsa.

In Russia, sourcing things never comes quite as easily as it does elsewhere. Figuring the pasochnitsa would be the harder of the two to run to ground, I started my search there. I prowled supermarkets and specialty kitchen stores to no avail. I checked the farmer’s markets and found

nothing – but got lucky with some local knowledge. Since the primary ingredients of paskha are cream, curd cheese, or tvorog, eggs, and butter, I threw myself on the mercy of the rosy-cheeked ladies who peddle these items at the market. “Try the churches,” they advised.

I’d got the scent, and after a detour to my three local churches and the Danilovsky Monastery gift shop, I headed strait towards the source: the Sofrino Ecclesiastical Store in the city centre, where you can buy anything and

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everything to do with the Russian Orthodox Church, from a slim two-rouble candle to a 13m-rouble marble baptismal font.

There was one pasochnitsa there and I held my breath as four priests cut in line in front of me (apparently they can) to stock up on holy water and wedding crowns. But I was in luck and, pasochnitsa in hand, I skipped down the stairs and into the street.

The kulich tin proved even more elusive.The church store didn’t have them, so I trawled the aisles of department stores and supermarkets, finding tube pans, charlotte molds and baba cups that were all too short or the wrong shape.

Back at home, I burst into tears of frustration.

“What’s wrong?” asked my Russian husband. Hiccupping slightly, I explained that, thanks to my lack of a kulich tin, Easter would be ruined – completely ruined. To my surprise, he burst out laughing before disappearing into the pantry and emerging, still chuckling, with four metal tins of various sizes full of tomatoes, coffee, beans and pickled mushrooms.

“Kulich tins,”he said. I dried my eyes and let out a chuckle of my own.

“Verily, kulich tins.”

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