Distributed with
1
Special supplement from Rossiyskaya Gazeta (Moscow, Russia) which takes sole responsibility for the contents. Wednesday, December 5, 2012 www.rbth.ru
Special Report Russia's space agency announces ambitious plans for the future
Sport Rugby Sevens teams look forward to next year's World Cup — in Moscow
P.04
P.08
Investment New initiatives aim at increasing trade with the UAE
For business, more than just sand and oil Relations between Russia and the UAE, close since the Soviet era, are set to move into a new phase with the expansion of bilateral investment encouraged by government initiatives. BEN ARIS, ANNA KRAVCHENKO SPECIAL TO RBTH
Close trade ties between the Russia and the Arab world date back to Soviet era, but in recent years the Russian government has been making an extra effort to encourage and support trade and investment in the region. In February 2011, then-Prime Minister Vladimir Putin ordered the Finance Ministry to prepare an investment agreement with the United Arab Emirates. According to the agreement, mutual investments will be exempt from taxation; profits earned by Arab companies working in Russia will not be subjected to any profit taxes; and companies will not have to pay taxes on dividends or the sale
of property. These are just a few of the promised incentives. Russian state-run companies enjoy similar privileges and guarantees on income earned from investments in the UAE. Since then, interest in trade and investment has only expanded. This month, hundreds of delegates
There are already 40 major Russian companies working in the UAE and more than 350 joint ventures. are expected to travel to the Russian Business Week and the Russian-Emirati Business Forum and Exhibition to be held December 15-20. The gathering will be the biggest forum of its kind held to date and involve discussion on topics ranging from infrastructure to nuclear energy. The forum is a clear indicatio
that mutual trade is the foundation on which this budding relationship is being built. UAE-Russia bilateral trade grew by 40 per cent to over Dh3.67 billion in the first half of 2012 compared to the same period last year and there is no sign of the pace slowing down. There are already 40 major Russian companies working in the UAE and more than 350 joint ventures operating between the two countries. Dr Igor Egorov, Chairman of Russian Business Council (RBC) in Dubai and the Northern Emirates, said:“Russian companies have invested $187.1 million in the UAE economy in 2011, and the UAE has invested $253.8 million into Russian projects. The conditions for mutual cooperation have lead to a flourishing of cross investment.” In general, the UAE is hoping to become an entry point to the Middle East for Russian investors. “The Emirates is positioning itself as a key market for Russia among Gulf countries, persuading Russia to enter the region through initial investments in UAE,”saidVladislav Lutsenko, the deputy director general of the Russian–Arab Business Council.“Currently there are a lot of free economic zones in different emirates with special regulations and lower taxes. If a Russian company wants to launch a plant in UAE, it can do it without difficulty.”
NOT JUST TENNIS MARIA SHARAPOVA EXPANDS HER BRAND The whole world knows Maria Sharapova as a star on the tennis court, but there is more to the Siberian native than just a powerful serve and a pretty face. Sharapova launched her first business in August — a candy line called Sugarpova, soon available in Dubai. PAGE 8
RBTH PUBLISHER
W
CONTINUED ON PAGE 3
Child protection law leads to web censorship fears ANNA ARUTUNYAN
Law enforcement agencies will be able to block websites with content considered harmful to children under new legislation passed by Russia's State Duma. Lawyers, politicians and Internet experts are split on how the law will be enforced, sparking a debate on whether it will effectively be used to censor content on the Internet in Russia. Russia’s law enforcement agencies already have the power to block content deemed extremist or illegal. But under the new legislation, a wide range of sites can be added to a blacklist. Debates over the Internet law
ITAR-TASS
SPECIAL TO RBTH
What should children see online?
have raged since July, when the State Duma passed a series of amendments setting up the procedure for establishing a register of websites hosting what they deem "illegal content." Such con-
tent includes child pornography, and the promotion of such activities as suicide or abusing drugs or alcohol. Under the new law, once a site has been listed on the register, the site’s provider has 24 hours to remove the illegal content from the site. If the site’s owner refuses, the provider is required to block access to the site. The Russian State Agency for Communication has been placed in charge of maintaining the register. Critics of the measure claim that the new law is just the latest in a slew of legislative moves aimed at restricting the activities of the opposition. Russia's opposition movement took on new life last December when spontaneous protests erupted in the wake of parliamentary elections. CONTINUED ON PAGE 2
A gateway between Russia and the Emirates Eugene Abov
Legislation Russian lawmakers in charge of Internet blacklist
A controversial law intended to protect young computer users online could be used to crack down on the opposition.
INTRODUCTION
GETTY IMAGES/FOTOBANK
IN THIS ISSUE BUSINESS & FINANCE
INTERNATIONAL
ALAMY/LEGION MEDIA
AP/EASTNEWS
Russians continue to snap up properties in the UAE
Putin, Obama take a new look at bilateral relations
P.03
P.06
elcome to the first United Arab Emirates edition of Russia Beyond the Headlines, appearing with Gulf News. We hope you will find it enlightening and engaging. The aim of Russia Beyond the Headlines is to introduce our country to the international community through compelling stories, insightful opinions and analysis that encourages readers to discover more. Russia is a diverse and complex country in a state of major transformation, still coming to terms with its long – sometimes painful, sometimes curious – history. We believe this can only be understood through in-depth analysis. Even so, Russia punches below its weight in global media. We aim to address that with stories that are topical, enjoyable and – above all — objective. Many of these stories are ones that currently fall under the radar of major international news outlets. Our authors are professional journalists who write for wellknown publications in Russia and internationally, while our expert columnists embrace a wide range of views about Russia's future and its place in the world. Many Russian businesspeople and holidaymakers already know the UAE through Dubai, one of the world's truly global cities that is for many people a gateway to the greater Middle East. An increasing number of entrepreneurs from the Gulf region are now looking at Russia as a promising market for their businesses, too. Russia and the UAE have more in common than just business interests, however. Both countries are rich in cultural and historical traditions, and home to a population made up of diverse ethnicities and nationalities. We hope to show you more of these aspects of Russia. If this print edition whets your appetite (as we hope it will) you can learn more about Russia through our website, rbth.ru, where you can find additional news, commentary and multimedia features – including videos, photogalleries and podcasts. You can also download our iPad app and take part in the interactive debate about Russia at our Facebook and Twitter pages. We look forward to hearing from you!
RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_WEDNESDAY_DECEMBER_05_2012
Politics&Society
Child protection law leads to web censorship fears CONTINUED FROM PAGE 1
ITAR-TASS
Religion Tougher penalties proposed for offensive acts
Lawmakers defend believers' rights A resolution seeking to protect religious groups against malicious acts or insults could soon enter the statute book.
IN FIGURES
Dh1,142
ROMAN VOROBYOV RUSSIA BEYOND THE HEADLINES
would be the fine for offending reli-
gious believers if new legislation is passed.
Russian parliamentary deputies have decided to stand up for the rights of religious believers not to be subjected to behaviour they may find offensive or insulting. The State Duma is working on a draft resolution entitled On Protecting the Religious Feelings of Citizens of the Russian Federation. According to Yaroslav Nilov, head of the Duma’s Committee on Social and Religious Organisations, stricter legislation was needed following a recent string of incidents of religious hatred. “Temples and synagogues have been defaced with swastikas, satanic symbols and various inscriptions," he said. "Islamic spiritual leaders were killed and hurt in two high-profile terrorist attacks in Dagestan and Tatarstan. A wooden church was burned down in Krasnodar and a Protestant prayer house in Moscow was demolished...This is a challenge to peace in the country, and we have to respond in a timely manner.” According to the proposed amendments, desecration of objects of worship would result in a sentence of up to five years in prison, 400 hours of mandatory community service or a 500,000-rouble (Dh60,000) fine. Offending religious believers would warrant a 300,000-rouble (Dh1,142) fine, 200 hours of community service or up to three years in prison. Vsevolod Chaplin, chairman of
Dh60,000 is the fine for desecration of objects of worship under the new proposal. Alternatively, offenders could go to prison for five years.
"It is very important for the government to understand the feelings of its society," said Mufti Albir Karganov. the Synodal Department for the Cooperation of Church and Society of the Moscow Patriarchate, said that such a law is necessary for national security. Russian Muslims have also stressed national security concerns in their support for the legislation. In particular, they back the government’s intention to enforce a ban on the distribution of the controversial video Innocence of Muslims. Moscow’s chief mufti Albir Karganov said: “It is very important for the government to understand the feelings of its society, its people. In countries where people didn’t find understanding and support from the authorities, they poured into the streets in protest.”
But the proposals also have their critics. Lyubov Borusyak, a sociologist and associate professor at the Higher School of Economics in Moscow, says the law would leave too many loopholes for abuse. “Such a law could never work universally by definition. There’s a crime to be followed by a punishment. It is always going to be selective; it will always be arbitrary, because it’s impossible to describe specific actions subject to this law. And if this is impossible, you can apply the law to anything you like,” she told BBC Russia. Kommersant FM radio commentator Konstantin von Eggert believes existing legislation is enough to protect believers. “New laws would amount to nothing more than an attempt to impose censorship… which would cause a future backlash against the church,” he said. Some representatives of religious communities are also uneasy about the initiative. Said Rabbi Michael Yedvabny:“The Criminal Code already contains penalties for inciting religious or ethnic hatred, as well as for religion- or ethnicityrelated hate crimes. The proposed punishment for offending religious feelings dangerously encroaches on the concept of freedom of speech." For his part, Archpriest Pavel Velikanov of the Moscow Orthodox Spiritual Academy, thinks the proposals unfairly elevate religious believers over ordinary citizens. “I feel uncomfortable that a person who claims to be a believer would receive some kind of exclusive status relative to another person,"Velikanov said.
Following Vladimir Putin’s inauguration in May 2012, Russia’s parliament passed a law increasing fines for unauthorised protest rallies, and another requiring NGOs with foreign funding to register as foreign agents. The new law provoked a heated response from human rights activists and the opposition. As the amendments to the bill were being debated in early July, the Presidential Human Rights Council issued a statement calling the bill an attempt to introduce censorship, which is unconstitutional in Russia. Fearing that the law, if passed, could apply to some articles on its website, the Russian sector of Wikipedia shut down in protest for a day in July, further fuelling the debate. Leaders of Russia’s burgeoning Internet industry argue that the bill presents problems besides the technicalities of enforcement.
A recent poll suggests a majority of Russians would support some form of Internet censorship. “This law concerns the protection of children. But most current cases of sites being blocked or filtered are about content deemed extremist,” said Anton Nosik, an executive at Russian blogging platform LiveJournal. Artem Tolkachev, a lawyer with Tolkachev & Partners, sees no ulterior motive behind the new law: “Personally, I support this law, and find the mass hysteria accompanying it isn’t completely justified,” Tolkachev said.
Anti-Islam video poses test for new legislation The recent controversy over the YouTube video Innocence of Muslims, which sparked violent protests in the Arab world, is an interesting example of how the new law might be used. A court in Grozny, the capital of the Muslim-majority Republic of Chechnya, ruled that the video is extremist, but this court doesn’t have the powers to ban the video across Russia. Russian lawmakers have asked law enforcement authorities to check the clip for signs of extremism, but even before their conclusion was reached, access to YouTube was blocked temporarily in the Siberian city of Omsk. In theory, the new law could jeopardise the entireYouTube domain in Russia. Google, which ownsYouTube, may either have to block access to Innocence of Muslims in Russia, or face the blacklisting of the entireYouTube site. Google stated earlier this month it would agree to block Innocence of Muslims pending a court notice after a Moscow court also found the content extremist. The company cited its own policy of blocking certain material in countries where it is found to be illegal.
Poll shows support for Internet restrictions Compounding the problem are attitudes to censorship that are apparently less clear-cut than previously believed. A recent poll suggests that a majority of Russians would support some form of Internet censorship. Sixty-three per cent of respondents were in favour of blocking harmful content on the Internet, with 19 per cent against, according to a survey by the independent Levada Centre.
Children and computers: What do parents think about limiting access?
NEWS IN BRIEF Emirates flies new Airbus from Dubai to Moscow An Airbus A380 with the logo of Emirates Airlines painted on its side landed at Moscow's Domodedovo Airport for the first time on December 1. Dubai-based Emirates will fly the Airbus, the world's largest and most luxurious airliner on its Dubai-Moscow-Dubai route every day. The Airbus A380, which holds more than 500 passengers may not seem much different from any other plane in economy class, but first-class passengers are provided with personal cabins that include massage beds, showers and spas. Emirates began flying to Moscow from Dubai in 2003. Vasili Krilov
Gorbachev releases new book © RAMIL SITDIKOV_RIA NOVOSTI
02
Mikhail Gorbachev is still churning out books at the ripe old age of 81. The latest offering from the first and only President of the Soviet Union is“Alone with Myself,” which he worked on for more than five years. “It’s hard. The hardest thing is to write about your life sincerely and frankly,” he said. “I dedicated the book to my wife. She used to say: If you can, if you have the strength, it would be great if you wrote this book.” Alexander Panov
WTO accession poses some risks for Russia PresidentVladimir Putin has held an extended session of his Security Council to address problems surrounding Russia’s WTO membership. According to Putin, the country’s long-awaited accession will encourage economic modernisation and facilitate efforts to improve the business environment. However, he warned that the country was unlikely to reap quick benefits. “We observe higher risks related to the obligations we assumed: primarily, our commitments related to lowering import duties on some goods,”said Putin. Vedomosti.ru
Corruption Russians can now report bribes using a mobile application that collects information in real time
Bribe-fighting app calls attention to a big problem The Bribr.org website offers citizens a new way to document bribery anonymously by using their mobile phones DARYA LUGANSKAYA ALAMY/LEGION MEDIA
MOSKOVSKIYE NOVOSTI
A new website called Bribr.org appeared online in early October. The site, a mobile application that collects information on bribery, aims to fight petty day-to-day bribe-taking rather than exposing any bigtime corruption. The site's developers claim it is apolitical. On the Bribr website, users can download the application to their iPhones and anonymously confess to paying a bribe – for example,
Russians reported 2 million roubles in bribes by mid-October.
after being pulled over for drunk driving. Users can specify the amount, location and category of the bribe given. According to statistics posted on Bribr.org at the time of publication, the total amount of bribes disclosed since the site opened about six weeks ago has reached a shocking 2 million roubles (Dh238,000). Most of these bribes
were paid at universities and kindergartens. Much of the website’s user interface is taken up by a map that pinpoints the locations of where bribes have been paid. “Corruption has become the number one problem in Russia, but people tend to place the blame on top officials, rather than on themselves,” said Yevgenia Kuida, editor-in-chief of Afisha magazine and founder of the Bribr project. The Bribr team acknowledged that there is no way to guarantee the authenticity of each report; they must rely instead on the responsible behaviour of their users.
All input is pre-moderated, with absurd claims dismissed on the basis of common sense, and spam texting from single phone numbers blocked.“We are not claiming 100 percent accuracy. It is all about spreading the word and promoting responsibility through a game,” Kuida said. The creators of the project intend to take the idea of intolerance to petty corruption offline, too. They have printed wads of zeroruble banknotes – also downloadable from the website – that can be used to bribe a traffic cop or to hang at the office for everyone to see. Apps are being developed for Nokia and Android smartpho-
nes, and negotiations for project support are underway with the Russian office of Transparency International’s anti-corruption research and initiative center. Experts and prominent figures in the fight against corruption are sceptical about the project.“While certainly interesting, this project is very specific and geared towards a very narrow section of the public that uses the iPhone, which is not the most popular platform around,” said Ivan Begtin, director of the NGO Informational Culture.“The main questions for Bribr are: How are false or erroneous reports weeded out, and why is there no app for Android?”
RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_WEDNESDAY_DECEMBER_05_2012
Business&Finance
03
Real estate As disposable income grows among middle-class Russians, more and more look to the UAE for vacation properties
Russian homebuyers chasing sun in the Gulf SPECIAL TO RBTH
Six months of winter and three more months of slush can drive anyone crazy, complains housewife Svetlana, who recently convinced her husband that they needed to buy a residence in a warmer climate and is now researching numerous websites selling real estate overseas. “We would like to own an apartment or a small house where we can hide from the Russian cold for at least a month, but without paying five-star hotel prices for it,” she said of her plans. Until recently, Svetlana had been dreaming of Egypt, especially as the resort town of Hurgada had some budget choices to offer. However, the unrest that followed the toppling of former president Hosni Mubarak’s regime has cooled her interest in pyramids and pharaohs. Her husband has also started making more money, allowing them to start looking into what’s available in the UAE. The Arab world is now the fifthmost popular destination for Russian real estate investments, and for Russians interested in Arab real estate, the UAE is the top pick, according toYelenaYurgeneva, director of Knight Frank’s Premium Real Estate Department in Russia and the CIS.
For business, more than just sand and oil CONTINUED FROM PAGE 1
One of the areas that has been especially active is in real estate. Both countries have enjoyed real estate booms in the last decade. “Russians remain one of the main investors into the Dubai economy. They have invested over $600 million into real estate and are now in fifth place in the world in terms of investments,” said Egorov. Dubai, the largest city in the UAE, has attracted the most interest. Analysts report that real estate prices have risen of as much as 20 per cent since the start of this year in some developments. Going in the other direction, investors from the Middle East are pumping Dh642 million into Russian power generator Enel OGK-5 and the UAE’s second largest port operator, Gulftainer, has secured a Dh1 billion contract to co-develop and operate Ust-Luga Port near the Russian city of St Petersburg in what is believed to be the largest Emirati private investment in Russia so far. Russia is also interested in participating in UAE’s infrastructure development projects. In June this year, state-owned Russian Railway said it would participate in a ten-
It's not all about the money Russian banks have now started to follow their clients into the UAE. In 2008, the Renaissance group announced the launch of its Gulf operations and more recently stateowned VTB Capital followed suit, expanding its equity division in Dubai. Said Makram Abboud, who was appointed VTB Capital's chief executive officer for the Middle East and Africa in January: “VTB Capital does not have the legacy issues that are impacting many other firms. We are able to grow our business at a time when many others are downsizing, reducing their capabilities and withdrawing from specific markets and businesses.”
IN FIGURES
Dh3-7 million In general, Russians' demand for overseas real estate has exploded during the past two or three years. list. Russian investments in real estate are significantly higher than investments in UAE-based businesses. According to Russia’s Ministry of Economic Development, Russians invested Dh161.6 million ($44 million) in the local economy in the first half of the year, mostly in wholesale and retail trade. Although the UAE still tops the list of investment choices for Russians, interest in Arab real estate in general is gradually ebbing, according to Aforex analyst Narek Avakyan. Business activity and construction are slowing down in the Arab world. Real estate prices in the Emirates have practically come to a halt, suggesting the industry is stagnating. “Until ev-
der to building a rail line in Abu Dhabi worth Dh7.3 billion. “We have the best chances in the Gulf. Today we have all rights to think that we passed the prequalification stage for the project in the UAE,”Yury Nikolson, head of the subsidiary firm Zarubezhstroitekhnologii (ZST) that will do the work, told the Prime news agency. In October, the Russia government took another step towards catalysing mutual investment by launching a direct investment fund. Prominvest, the investment arm of state-owned Russian Technologies, will form partnerships with Dubai-based property developer Damac Group and Gulftainer to create a fund to promote direct investment that will benefit both Russia and the UAE. “It seems the UAE companies prefer to enter the capital of Russian companies by buying blocking stake. As the UAE investors are mostly big funds, they usually go for long-term projects. They also tend to chose companies with state capital and centralized management, similar to some Russian and Chinese big funds,”saidVladimir Dorogov, an infrastructure analyst with Alfa Bank.
IN FIGURES
Dh642
Dh1 billion
20 per cent
million
is the amount of a tender Russian Raliways is currently bidding on to construct a rail line in Abu Dhabi.
is how much real estate prices have risen since the start of the year in some of Dubai's hottest developments.
is the size of a contract won by UAE operator Gulftainer to develop a port near St Petersburg
is the average price of a managed apartment in the United Arab Emirates being considered by the typical Russian buyer.
erything stabilises completely in the global economy, don’t hold your breath for a return of the Arab countries’ construction boom. That’s why Russian demand for real estate in the UAE, as well as in other traditional regions, is unlikely to grow in the next few years,” Avakyan said.
Dh2.5 billion Is the total amount of real estate bought by Russians in the UAE during the first 10 months of 2012, up significantly from the year before
Shopping spree In general, Russians’ demand for overseas real estate has exploded during the past two or three years. This is mainly because at times of economic instability, liquid properties are believed to constitute a reliable asset for the protection of capital. This primarily concerns mature and transparent real estate markets with understandable processes such as the UK, Switzerland, Austria or France,Yurgeneva noted. Nevertheless, Russians are willing to look at less mature markets. Konstantin Kovalyov, managing partner of the Russian Union
Dh161 million is how much Russians have invested in the economy of the UAE in the first half of 2012, mostly in wholesale and retail trade.
Today many Russians find it more interesting to buy a holiday home on a distant coast than in the local countryside.
of Engineers, said that demand for foreign real estate in general among Russians is growing quite fast. He pointed out that the number of buyers of Spanish real estate on the Costa Blanca is growing, because prices there have been falling. He also noted that because of the instability in the European markets, Russian investors have been flocking to London, which guarantees them stability, asset protection and a steady annual appreciation (particularly in the centre) of 10 per cent on average plus a stable rent income. Now that prices in Europe have become attractive, many Russians are finding it more interesting to buy a holiday home on a distant coast than to pay several times more for a small house in the countryside around Moscow. Some buy centrally located apartments to rent out, while others may want commercial space for business. As there are always a lot of tourists by the sea, demand is guaranteed.
Digital Russian IT security system plans to expand in the UAE
Tech firm to keep a watch on data in the desert The Middle East makes up a growing percentage of the market for digital security products, especially those produced outside the US. Russian IT firm Infowatch hopes to take advantage of this. Russian tech firm Infowatch, which designs data protection systems, is considering opening an office in the Middle East, according to CEO Natalya Kaspersky. "The United Arab Emirates (UAE) is the most likely location, either Dubai or Abu Dhabi," Kaspersky told CNews. "Rents are high in both places. Another option is Saudi Arabia, which has a larger market than the UAE." In 2011, Infowatch's revenue was $5.9 million. Kaspersky expects the figure to increase by 15 per cent in 2012 to about $6.8 million, of which 8-10 per cent will be from Gulf countries. At present, the company only has a virtual office in the Middle East, made up of one permanent member of staff and several partner companies. In the interview Kaspersky clarified that the most active sales region is Bahrain, and the company's products are already attracting interest from neighbouring countries. Infowatch already has projects under way
PRESS PHOTO
VIKTOR KUZMIN
“Even in the crisis years of 2010–2011, this destination not only attracted interest but also generated actual sales,” she said. Yurgeneva explained that it is mostly residents of large regional centres, such as Novosibirsk,Yekaterinburg and Krasnoyarsk, among others, that are showing an interest in the Emirates. In her experience, a typical buyer is a the owner of a medium-size business who is considering a managed apartment in the Dh3-7 million ($1–2 million) price range that would generate an investment return from rent. “Conventional wisdom is that the Dubai market is attractive from this standpoint. But it’s worth noting that the time of obscene profits is over, and Dubai prices often show moderate growth, rather than sharp jumps,” she added. Dubai in particular was a hit with Russians as recently as the mid-2000s. Major Russian companies such as Gazprom and LUKoil were scooping up real estate in the Emirates by the floor. Interest in UAE real estate has cooled since, although it has remained sufficiently strong. According to official data, Russians bought around Dh2.03 billion ($553 million) of local real estate in 2011, and $690 million in the first 10 months of 2012. Currently, Russia is among the top five countries whose citizens are investing in UAE real estate, based on data from the first eight months of this year. India, Pakistan, the UK and Iran fill out the
ALAMY/LEGION MEDIA
Although investment interest in the United Arab Emirates real estate has peaked, Russians are still the fifth-most active buyers of homes and apartments in the sunbaked country.
Russian investors find much to like in the Dubai real estate market.
Infowatch CEO Natalya Kaspersky has big plans for the Middle East.
There is a niche for Infowatch to fill as Persian Gulf countries are keen to avoid USmade security products.
in Qatar, Oman, Kuwait and Saudi Arabia. The company plans to turn a profit in the region before adding extra resources, including new office premises and local support staff. Alexander Chachava, president of Leta Group, another Russian IT security company, believes that Infowatch really does have plenty of opportunities for business development in the region. "Demand for information security products in the Middle East is strong. I know that Kaspersky Lab is well established, and Eset also enjoys good sales," he told CNews. "Infowatch, too, had good starting positions, since Natalya Kaspersky used to be a shareholder in Kaspersky Lab," said Chachava. He added that an important role in the regional development of Infowatch could be the fact that Gulf countries are keen to avoid US-made IT security products. "Unlike the U.S. market, for example, the Middle East is not oriented towards integrated solutions, but more towards stand-alone ones. So there really is a niche out there for Infowatch," Chachava said. CNews
04
RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU
Special Report
WEDNESDAY_DECEMBER 05_2012
ROSKOSMOS RUSSIA'S SPACE AGENCY
Roskosmos marked a milestone in 2011 with the completion of the Glonass navigational satellite system — Russia’s answer to GPS, which relies on US satellites.
The Next 30 Years
WITH A REFORM UNDERWAY AND AN AMBITIOUS STRATEGY Among the plans Roskosmos has for the near future are the construction of a new cosmodrome in eastern Russia and a base on the moon.
FOR THE NEXT 30 YEARS, THE SPACE AGENCY HOPES ITS BEST DAYS ARE AHEAD
THE FUTURE IS IN THE STARS... AND PLANETS Scientists preparing for life on Mars ANDREI KISLYAKOV SPECIAL TO RBTH
The next step in mankind’s journey of discovery in space is likely to be Mars, at least according to Vitaly Lopota, president of Russia’s Energia Rocket and Space Corporation.“Over the next 50 years, Mars will be the focus of space research and exploration,”said Lopota. “This planet could be a relatively comfortable place to live — air pressure is just a hundredth of what it is on Earth. When looking into the task of space colonization, Mars is a good place to start. Moreover, Mars is the only planet with enough water to support humans.” Russian scientists have already begun to explore this possibility. They have developed selection criteria for a team to fly to Mars, based partly on their experiences in the Mars-500 project, which confined six astronauts to a space-ship-sized facility for 520 days — the length of time scientists believe necessary to fly to Mars and back. The experiment took place from June 2010 to November 2011. “In choosing a team for a Mars mission, we are mainly looking for genetic attributes and top results on rigorous physical and psychological tests,” said Anato-
IN FIGURES
687
EARTH DAYS is how long it takes Mars to orbit the Sun. A Martian day is about half an hour longer than an Earth day.
24
KILOMETRES is the height of Olympus Mons, the tallest volcano on Mars. It is three times the height of Mount Everest.
10
KILOGRAMS is how much a 60-kg person would weigh on Mars. Mars has less mass than Earth and therefore less gravity.
The most pressing task for scientists is to find a way to ensure a supply of oxygen, water and food in space.
SHUTTERSTOCK/LEGION-MEDIA
ly Potapov, a researcher for the Institute of Biomedical Problems at the Russian Academy of Sciences.“We now have every tool at our disposal to help develop a system that will ensure the biomedical security of the Mars mission.” Specialists at the Institute for Biomedical Problems believe the most pressing task is to find a way to create a self-sustaining system in space that will ensure a constant supply of oxygen, water and food, and also provide for the elimination of metabolic waste products. In order to create such a system, scientists say they need at least 10 years. The experience of participants in the Mars-500 mission and cosmonauts who spent time at the ISS has contributed to a deeper understanding of the psychological consequences, but many questions still remain. Despite the carefully controlled conditions of the Mars-500 capsule, scientists were unable to recreate some of the conditions cosmonauts would have to contend with on a real flight, such as the effect of long periods of weightless and limited opportunities for activity. American scientists believe that people who have spent prolonged periods of time in space suffer from a loss of bone density. Observations carried out on 13 astronauts, each of whom had spent six months at the International Space Station (ISS), revealed that their skeletal mass had decreased by an
Russian scientists are making advances that will allow a team of astronauts to visit the Red Planet, but there are challenges to a Mars mission than cannot be replicated on Earth.
average of 14 per cent since they left Earth. Victor Baranov, assistant director of the Institute of Biomedical Problems, explained that additional experiments, one set to be conducted with chimpanzees should contribute more to scientists' understanding: “[The chimpanzees] will be subjected to the same radiation levels that are in space, whereas other issues will be examined using human testers.” But even the most sophisticated tests cannot provide conclusive answers on the consequences
to the body of spending long periods of time in space. And although the Mars-500 participants did help scientists understand something of the psychological strain, they could not give comprehensive answers to such problems as the effect of being an unimaginable distance from the Earth; the long monotony and isolation of space travel; the cramped conditions on board the spacecraft; the strange sensation of weightlessness; personal tensions within the team; the substantial workload,
both on board the ship and out in open space; the unpredictable nature of the job; the huge risks involved and a sense that the entire mission rests on your shoulders. Until now, cosmonauts have had teams of psychologists on hand at mission control, and support has always been readily available where the signal conditions were good. However, on a trip to Mars, mission control’s role will be significantly reduced. Signals from Earth will take 40 minutes to reach the Red Planet.
International Space Station losing its appeal The International Space Station (ISS) was launched 14 years ago, on November 20, 1998; today its two principal operators — the US and Russia — seem reluctant to continue collaboration. ANDREI KISLYAKOV
AP
SPECIAL TO RBTH
The ISS has been in orbit for just over 5,000 days. More than 200 individuals from 15 countries have been to the station since 1998, when the station’s first module was launched. “The experience we had with the first Salyut was utilized when the Mir station was built. This core module has become the prototype of what would eventually become the International Space Station,” said Sergei Krikalyov, head of the Yury Gagarin Cosmonaut Training Centre outside Moscow.
The International Space Station is expected to continue its orbital work until at least 2020. Its future thereafter remains uncertain.
“We learned so much when we worked at Mir. I cannot fathom how we would have built the International Space Station without all the knowledge we acquired. When that project started, both the Russians and the Americans knew how to cooperate, how our equipment worked together, and even how all of us would have a rest together,” said American astronaut Michael Barratt. Today, despite some minor, routine technical problems and one major problem following the crah of a Progress freighter spacecraft last year, the ISS program continues. But this may not always be the case. According to reports, there is little chance that the current leaders of the station’s operations team will continue taking part in the program in the long-term. The two
principal operators of the ISS – Russia and the US – do not have much interest in further work within the station According to the NASA operations program published on July 5, 2011, the low Earth orbit in which the ISS is currently operating will be reserved for private companies which might bring tourists or carry out research. As NASA moves its focus to deeper space, the US has little motivation to continue its cooperation with Russia. Even current US plans for further exploration of the moon and Mars do not include collaboration with Russia. Outside of space exploration, there have been some independent scientific experiments, but their number remains insignificant. The US does not seem particularly concerned about the future of the ISS.
For Russia, however, the ISS remains an important factor in the development of manned space exploration. The loss of the station would deal a critical blow to the the country's space industry. Nonetheless, in May 2011, the head of the Central Research Institute of Machine Building, Gennady Raikunov, said that the ISS is a closed chapter for Russian science, and that the future of science lies with exploration of the moon. "We are thinking about using our natural satellite – the moon – as a satellite, where we could set up many more experiments and make use of far more opportunities," Raikunov said. According to Krikalyov, the International Space Station will continue its orbital work until 2020, at the very least. Beyond that, the future of the ISS is anyone's guess.
RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_WEDNESDAY_DECEMBER_05_2012
Special Report Roskosmos’ most ambitious near-term goal is the establishment of a permanent base on the surface of the moon. The agency hopes to fulfill this mission by 2030.
In 2011, construction began on a new cosmodrome in the Amur Region, which should allow Roskosmos to move launches out of Kazakhstan into Russia by 2015.
Unfortunately, 2011 was mostly notable for its disasters, including the loss of Phobos-Grunt, a probe intended to explore the Martian moon Phobos.
05
INTERVIEW IGOR MITROFANOV
Plans for moon research will benefit society in many ways
Are space specialists seriously discussing lunar bases? The moon is naturally our immediate objective in space. I believe its development will start in the 21st century. There will be lunar bases just the way we have bases in Antarctica. We used to have two rovers on the moon, and we brought back soil from there. The knowledge gained in Soviet times has not been lost, and we are capable of doing all the things our predecessors did. So far, the Russian program has only two moon-related projects: LunaGlob and Luna-Resurs. What is their progress? The projects were revised early this year following investigations into the Phobos-Grunt crash. We have learned our lesson. We recently completed testing the engineering models of equipment
Mars is the only planet whose surface can be seen in detail from the Earth; it may also be the only other planet that could sustain life.
ITAR-TASS
Russian officials are speaking with growing confidence about the moon being the top priority of the Russian space program. Russky Reporter magazine asked Igor Mitrofanov, chief of the gamma ray spectroscopy lab at the Space Exploration Institute of the Russian Academy of Sciences, to share his thoughts on the subject.
HIS STORY NATIONALITY: RUSSIAN STUDIED: PHYSICS AND ASTROPHYSICS
Born in Leningrad (now St Petersburg), Igor Mitrofanov studied physics at Leningrad State University, focusing on quantum mechanics. He did graduate work in astrophysics at the Ioffe Physical Technical Institute (also in Leningrad) before leaving for Moscow in 1981 to take a job at the Space Research Institute (IKI), where he still works. MItrofanov specializes in high-energy astronomy.
for landers and will soon start integrated tests. Luna-Glob is expected to land on the moon in 2015; the orbit will be explored in 2016; and the heavier orbiter Luna-Resurs is scheduled to land near the southern pole of the moon in 2017. We are developing a workhorse to study and explore the moon. Soil will be delivered from the pole to compare it with the samples that were brought from the middle latitudes in the last century. We are examining the feasibility of taking the soil from a depth of about two metres without losing volatile substances. We may even find water there. There is the Moon Test Ground project — a robotic deployed base — at the Lavochkin Research and Production Association. Is this still being discussed as your next step? It is our plan for the future. I learned a great deal from the way [Sergei] Korolyov, the great Soviet rocket engineer and spacecraft designer, used to work. He turned every project into a step towards the next one. The concept of the test ground is something that we need to strive for on the current projects. Here is an example: the orbiter to be
launched in 2015 will have a beacon that will keep operating after the orbiter itself ceases its work. These radio beacons are the first contributions to infrastructure deployment. If the landing area proves interesting, then a heavier rover will be delivered there to take soil samples. Wouldn’t it be wiser to invest in the development of cheaper launch vehicles and then think about lunar bases? I’m doing my best to fight the stereotypes that the project is expensive. We need to remember that the first projects I’m talking about cost about 10 billion roubles [Dh1.2 billion]. When we speak about ambition, this is small change. We also need to remember that this money doesn’t fly to the moon, but stays here as infrastructure, jobs and new materials. If we are being realistic, which country will be the first to have a man on the moon in the 21st century? It’s a matter of the world outlook. I believe it would be right if the station on the southern pole of the moon became the next international project after the ISS. Then it won’t matter who will be the first to step on the moon.
Space Weather NASA and Russia's space agency focus on the importance of solar flares
Russia and the United States are both redoubling their efforts to study the relationship between solar flares and space weather — and how they affect life on Earth. ANDREI KISLYAKOV SPECIAL TO RBTH
Russia’s space program is directing more time and money to its Intergelio-Zond vehicle, which will allow scientists to get closer to the sun than ever before. The vehicle, which is projected to launch in 2018, is currently in the research stage. Intergelio-Zond will help scientists gain a deeper understanding of solar flares, which have a significant impact on space weather, which in turn affects advanced technological communication systems on Earth. “The vehicle will be sent close to the sun with the help of a gravity-assist maneuver near Venus,” said Lev Zelyony, director of the Space Research Institute (SRI) at the Russian Academy of Sciences. “It will be delivered into orbit with a perihelion [the orbital point closest to the sun] of 42 million kilometres. The perihelion may be eventually halved to 21 million kilometres, following other gravityassist maneuvers that make it possible to monitor the same areas of the surface of the sun for longer periods — up to seven days. “The module may descend even closer to the sun: Its minimum al-
titude will be limited only by the evaporation of the protective screen caused by solar emission. This will give the vehicle its own ‘atmosphere’ that will distort measurements.” Furthermore, the SRI and the Institute of Terrestial Magnetism, Ionosphere and Radio Wave Propagation (IZMIRAN) are developing a solar wind-monitoring system to ensure high-precision forecasts of magnetic storms 1.5–2 hours before they hit Earth. Chibis microsatellites will be the key component of the system, according to IZMIRAN Director Vladimir Kuznetsov.The first 90-pound Chibis was delivered from the International Space Station (ISS) to lowearth orbit on January 25, 2012. Understanding the effect of solar flares on space weather is also an important aspect of NASA’s Living with a Star program, which studies radiation belts — the rings of high-energy particles surrounding the Earth.These radiation rings depend on solar activity and space weather created by the sun, and can disturb the operation of satellites and communication systems. “We still don’t understand how the belts behave, more than 50 years after they were first recognized and described,” said Lika Guhathakurta, a NASA program scientist.“Nor do we have the ability to make any predictions, which is really very important.”
NASA
New technology allows for a closer look at the sun
Solar flares make for fascinating photos, but have as-yet-understood effects on life on earth, particularly in relation to space weather and advanced technological devices.
Solar Storms Dangerous for Technology In September 2009, the American GOES meteorological system detected an unusually high intensity of the Sun in the X-ray range, while astronomers discovered two bright regions on the Sun. Scientists were concerned about the discoveries
because solar activity causes the radiation belts around the Earth to expand, threatening the work of satellites. The strongest solar storm ever was registered on August. 28, 1859. The storm caused a breakdown of the
telegraph system, which suffered a voltage spike. Storms of this scale only happen once every five centuries, but those half as strong take place about every 50 years. The most recent one occurred on November. 13, 1960.
When the first astronomical measuring instruments were developed nearly 440 years ago, it became clear that the Sun affects all processes happening on earth. Solar activity – flares, magnetic storms and fire outbursts – can vary in intensity from hardly perceptible to powerful storms. Today, the world’s reliance on radio-electronic devices is so significant that intense solar activity could disturb the operation of life-supporting systems around the globe. Poor space weather is also known to impede the work of all orbital systems. The United States Department of Defense has estimated that space weather disruptions to government satellites add up to nearly Dh367 million each year. In 1996–2005, insurance companies paid about Dh7.3 billion to cover damages and losses of space vehicles caused by solar activity. The American continent is most vulnerable to fierce solar storms because of its proximity to the north magnetic pole. According to a study by MetaTech Corporation, if a storm with strength comparative to the strongest one ever recorded, which occurred in 1859 were to strike today, the entire power grid of North America would break down and operations to restore the energy supply could only be started a few weeks after the event.
06
RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_WEDNESDAY_DECEMBER_05_2012
International
Arms Russia's cutting-edge weapons find new interest from Middle Eastern buyers
Russia-USA What does the future hold?
Putin, Obama take a new look at relations IGOR YAVLYANSK IZVESTIA
Barack Obama will remain Moscow’s main partner in Washington for the next four years. What does this mean for the future of the vaunted "reset" of relations? Alexei Pushkov, chairman of the foreign affairs committee of the Russian State Duma and Alexei Malashenko, a member of Carnegie Moscow Center’s panel of experts, discuss the issues expected to take centre stage on the presidents’ joint agenda in the coming year.
if Washington could realize that they need to talk about starting a dialogue within Syria, rather than supporting one of the warring sides. But, unfortunately, the prospect of them realizing that doesn’t seem very likely.” M: “There are various options. The most realistic, from my point of view, is that America will support external intervention – but by the Arabs, not the West. They would say Syria is an Arab problem. That, by the way, is a more balanced solution than threatening them with American weapons.”
Iran ITAR-TASS
The deployment of US missile defense systems in Eastern Europe Pushkov (P): “I’m sceptical about the missile defense talks, although Obama seemed to promise to show more flexibility. But this will be severely restricted by the situation in Congress, where any step to meet Russia halfway will be equated with a betrayal of US national interests.” Malashenko (M): “I think we can expect a new round of talks that will end with a certain adjustment to American plans. This is not because of a change in approach by the White House and the Pentagon, but because of the high cost of the project. In the context of the economic crisis, the Americans will be forced to limit their ambitions somewhat.Whether a move like this will suit Moscow is not yet clear.”
Russian arms manufacturers are regular participants at defense trade fairs in the Middle East, including last summer's IDEX in Abu Dhabi.
As Russian materiel becomes more advanced — and therefore more competitive — the country's weapons manufacturers are looking beyond traditional arms buyers and are not concerned with offending Western powers. DMITRY LITOVKIN SPECIAL TO RBTH
As part of a drive to develop new markets, Russia's military-industrial complex is hoping to expand its presence in the Middle East. "We divide the countries of the region into three groups," said Ruslan Pukhov, head of the Center for Analysis of Strategies and Technologies. "The first are those countries ideologically aligned with the Soviet Union/Russia; the second are those with whom we have had limited contact, and the third are the ones still off limits for political reasons." In his opinion, the first group is made up of Iran, Iraq, Syria and Yemen; the second, the United Arab Emirates, Kuwait and Bahrain; and the third, Saudi Arabia and Qatar. Moscow sees the region as a promising alternative in the context of its gradually declining military-technical cooperation with China and India — countries that until quite recently accounted for the lion's share of export revenue for state-owned arms trader Rosoboronexport. Today, Moscow is a regular participant in nearly all defense trade fairs held in the Persian Gulf, pro-
moting such wares as the country's latest Su-35 and MiG-35 multi-role fighters, theYak-130 advanced jet trainer, the MiG-29 SMT and Su-30MK2 attack aircraft, the MiG-31E high-altitude interceptor, the Il-76MF military transporter, the Ka-52, Mi-28N and Mi-35M combat helicopters, and the Mi-26 and Mi-171SH heavy transport helicopters. In addition, Russian manufacturers offer the Pantsir and S-400 Triumph missile systems, as well as firearms for special forces. Despite the broad array of options, the market for Russian arms in the region is not as promising as the manufacturers would like. Ruslan Pukhov notes that international sanctions have brought cooperation with Iran to the brink of collapse. Meanwhile in Iraq, Baghdad cancelled a $4.2 billion
The success stories There are, however, examples of successful cooperation with countries in the Gulf region. For ex-
AN EXPERT VIEW
Ruslan Pukhov HEAD OF THE CENTRE FOR ANALYSIS OF STRATEGIES AND TECHNOLOGIES
"
Russia has been persistently trying to win over the Iraqi government in recent years through all the political and economic levers at its disposal. Far from peripheral is the fact that Iraq, like Russia, supports Iran's efforts to supply Syria's armed forces and provide material assistance to the Syrian government. On the opposing side, however, stand the United
States, Saudi Arabia, Turkey, and most of Europe. Although dependent on US financial aid, Iraq is not prepared to give ground on the Iranian issue, since it relies on Tehran's support to keep control of the Shiites in the coalition government. But Damascus could easily refuse to cooperate with Russia for fear of losing a powerful sponsor in the shape of Washington."
ample, Moscow and Abu Dhabi have concluded a contract to create one of the most advanced anti-aircraft missile systems ever seen, based on Russia's Pantsir technology. The system, whose specifications are unrivaled by any manufacturer anywhere, is designed to protect vital political, administrative, economic and military infrastructure from air strikes. The new rocket launcher can be used in a variety of ways: on wheels, on caterpillar tracks, on board a ship, or as a permanent installation. It includes two 30-mm automatic cannons that fire high-explosive anti-personnel, armor-piercing and incendiary shells, supplemented by a "package" of two blocks each holding six hypersonic anti-air-
The “Magnitsky Bill” to introduce visa and financial restrictions on a number of Russian officials P: “It’s traditional in America to have an anti-Russian law in place. The ‘Magnitsky Bill’ will replace the Jackson–Vanik amendment. It will definitely be passed. But the Obama administration has an interest in ensuring that it’s passed in a more watered-down form. It is most likely that it will not single out Russia as the sole and special target of this attack.” M: “A milder version will be passed. The White House has no desire to worsen relations. Of course, it doesn’t all depend on President Obama, but his victory will give a substantial boost to his authority.”
Moscow sees the Middle East as a promising alternative to its declining military cooperation with China. craft missiles. The strike range is a 12 km radius at a minimum height of 5 m. One of the system's unique features is the capacity to fire at targets while moving. Moscow has already supplied some its latest BMP-3 armoured personnel carriers (APC) to Kuwait. Some success has also been achieved by Russian carmaker KAMAZ, which has delivered 1,500 military and civilian vehicles to the region. Additionally, considerable progress has been made in Jordan. The result is a joint venture between Moscow and Amman to produce the new Russian-designed Khashim anti-tank system. Its unique selling point is that, unlike conventional hand grenade launchers, it consists of two parts: a reusable trigger mechanism and a set of one-time multi-caliber grenade cartridges (72 and 105 mm). Depending on the battle situation, the Khashim can deploy either armor-piercing (anti-tank or antiAPC) or thermobaric (anti-personnel) warheads. Khashim grenades can successfully hit targets at a distance of 700 metres.
Syria
The Putin–Obama relationship P:“Obama has a kind of moral debt to the current Russian president. Before his first visit to Moscow, he said – in a way that was rather incautious and politically tactless – that Putin was standing with one foot in the past and that he needed to understand the Cold War had ended. These words created a negative backdrop to their personal relationship. Knowing Putin’s character, I imagine that, if he gets a signal from his trans-Atlantic colleague that he is ready to build a constructive personal relationship, he’ll respond.” M:“These two politicians are unlikely to show sympathy toward each other. There’s no great love between them, nor has there been. It was easier for Putin to deal with George W. Bush. Relations with the U.S. at that time were bad, but the personal relationship was at a level of understanding.” First published in
P: “Our position and that of the United States could move closer
AFP/EASTNEWS
A brave new world for Russian weaponry
contract for some of Russia's most advanced weaponry under pressure from Moscow's chief rival in the region, the United States. Then there is the issue of Syria. Today Russia supplies Syria with a wide range of cutting-edge weapons systems and military equipment, including the Bal-E coastal missile system, the Pantsir system, the Igla man-portable air defense system, and Kornet anti-tank missiles — despite the fact that cooperation with the regime of Bashar al-Assad has not brought Russia any economic benefit. Damascus has seriously undermined Moscow's position by forwarding Russian arms to rebel groups in neighbouring countries, in violation of all agreements. Because of this, Russia has encountered the wrath of Israel, which has expressed its displeasure that Russian-made Kornet anti-tank missiles have ended up in the hands of Lebanese guerrillas. Moscow's support for al-Assad also hinders the prospects of cooperation with Saudi Arabia and Qatar — the richest buyers of arms and military equipment in the region. In addition to the myriad of difficulties working with Syria has presented for Russia on the international political scene, Syria has restricted creditworthiness, meaning that the country has limits on what it can spend.
P: “Obama will come under increasing pressure from Israel, the pro-Israeli lobby in the US and Republicans embittered by Romney’s defeat to take decisive action. In light of this, the likelihood of a scenario involving the use of force and military strikes increases.” M: “Nothing substantial will happen on the Iran track. America has had so many presidents, but Tehran is still standing, the same as ever. I don’t think it will be possible to mount attacks against Iran. Washington’s relations with the entire Muslim world are at stake.”
Vladimir Putin and Barack Obama face difficult questions.
RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_WEDNESDAY_DECEMBER_05_2012
Opinion
07
RUSSIA’S OIL: LUCK OR CURSE? DON'T FEAR OIL, MANAGE IT BETTER ECONOMIST
R
eliance on natural resources as the principal source of its wealth does not necessarily result in a country falling prey to the“resource curse.” For decades, Norway, Canada and Australia have all combined abundant commodity production with democracy and shared prosperity. More recently, Chile has also demonstrated how a developing economy with abundant natural resources can develop into a stable democracy. Of course, economies that rely on minerals also see their fortunes rise and fall with commodity prices. But the peaks and troughs can be smoothed through the accumulation of relief funds and developing sophisticated financial markets. The oil sector in particular is also a potential source of high-tech development, capable of pulling other industries along with it. But if this can happen in the West, why is it not also taking place in Russia? The essential reasons are ownership and competition. For example, Russia’s privately owned Novatek is far more efficient than state-run Gazprom. R&D investments in the monopolised gas industry lag far behind those of the far more competitive oil industry. Moreover, Russia is not alone in being a country where an abundance of resources discourages market reform and democratisation. There is no denying that Russia relies heavily on oil, and any strategy for change will have to bear this in mind. A 10 per cent change in the price of oil results in a 1 per cent fluctuation in GDP, more or less. And the state budget depends
on oil prices. What can we do to reduce Russia’s dependence on oil and gas? Above all, we must think beyond this industry. We need to facilitate investment inflows in nonresource sectors. And this can be done by complying with President Putin’s decree of May 7, 2012 on long-term state economic policy. This document envisions privatisation of all non-resource industries by 2016 — which by itself will improve Russia’s business climate. Some analysts have suggested this could move Russia up to number 50 in the World Bank’s Doing Business rankings from its current standing of 120, and add two points to Russia’s GDP growth rate, all from expansion in the non-
Sergei Guriev is dean of the New Economic School in Moscow.
HOW TO TURN OIL INTO HIGH-TECH Ivan Grachev MEMBER OF PARLIAMENT
G
lobal demand for Russia’s mineral resources is huge. Exports of oil and oil products have risen from 120 million to 240 million tonnes in the past 10 years — from $50 billion to $390 billion. But at the same time, demand for manufactured products and other industries drawing on Russian knowhow has weakened. To some extent this is nothing surprising: as exports of commodities have grown, their role in the economy has increased, too. But accepting this as the natural way of things is dangerous. Russia’s fe-
deral budget is reliant on commodities revenues — according to official data, commodities contribute around 60 per cent of the federal budget; in reality, that number is closer to 75–80 per cent as much of the service sector depends on money from oil and gas. We must make better use of the wealth our commodities have brought us. The issue is that we are wasting the money — spending it on non-productive services investments, for instance, rather than invest it in the development of“real” economy sectors. This is because power in Russia is held by a commodity-based bureaucracy totally reliant on oil and gas revenues. Some observers argue that developing the oil and gas industry
NATALIA MIKHAYLENKO
Sergei Guriev
resource sector. What about the other approach to diversification — building a top-down non-oil and gas production? Reliance on such a method would be misplaced. In his book, Boulevard of Broken Dreams, leading venture business researcher and Harvard Business School professor Joshua Lerner shows that even in America, with its professional and non-corrupt bureaucrats, such attempts failed. Of course, we shouldn’t think that the "resource curse" can be broken through a program of privatisation alone.We must also take up the struggle against corruption and fight for the protection of property rights, de-monopolisation and economic deregulation. If we can break free from these traps, then we can expect growth and diversification, as well as transparency and accountability of the authorities.
will automatically lift other industry sectors. This is a gross exaggeration. Major companies such as Gazprom and Rosneft spend only sparingly on research and development — only around 1 per cent of their annual revenues. This is not the kind of money that can spur the development of accompanying industries. What’s worse, we are often guilty of not trying to create something new ourselves. Instead, we prefer to buy from elsewhere. A government that genuinely understands development would know that change cannot come unaided. If we want to reduce the dominant role commodities play in the Russian economy, we must adopt new policies and direct investment to sectors with the highest potential. I believe Russia has four areas where we could be global leaders. The first is energy, but instead of simply sending oil abroad we need to sell products made out of it. Second is applied mathematics, where we have a long-established reputation.Third is aerospace, and fourth is biotechnology. The essential step needed to drive these sectors forward is the introduction of tax breaks for innovative companies. Companies in the Skolkovo Innovation Centre just outside Moscow already benefit from this. Every entrepreneur in Russia whose activities fall within the scope of the law on innovation should have the same support. Then, in five years' time, a good number of small businesses would grow into medium-sized enterprises, and we would have a strong inflow of foreign investment. Today, small businesses account for just 10 per cent of GDP. By taking the right steps now, 10 years from now our knowledge-based economy could account for 50 per cent of federal revenues. This doesn’t mean that the oil and gas sector will shrink — only that revenues from other sectors will rise. Ivan Grachev is chairman of the Energy Committee of the Russian State Duma.
RUSSIA'S BABY BOOM A GAME-CHANGER Alexandra Shevelyeva JOURNALIST
ALYONA REPKINA
A
ccording to federal statistics agency Rosstat, there are 12 million people in Russia today between the ages of 27 and 31. Besides making up a substantial chunk of the population, this demographic is exceptionally active within society. They are managing newspapers and running advertising companies, setting up charities, hosting TV shows, teaching in universities and trying to run businesses. The protests last winter were mostly attended by people in this age group. Where did they all come from? The baby boom of the 1980s was, in part, an response to the 1981 Resolution of the Communist Party on Measures to Increase Government Support for Families with Children. This was when the gov-
LETTERS FROM READERS, GUEST COLUMNS AND CARTOONS LABELLED “COMMENTS”, “VIEWPOINT” OR APPEARING ON THE “OPINION” AND “COMMENT & ANALYSIS” PAGES OF THIS SUPPLEMENT ARE SELECTED TO REPRESENT A BROAD RANGE OF VIEWS AND DO NOT NECESSARILY REPRESENT THOSE OF THE EDITORS OF RUSSIA BEYOND THE HEADLINES OR ROSSIYSKAYA GAZETA. PLEASE SEND LETTERS TO THE EDITOR TO UAE@RBTH.RU
ernment began paying benefits to citizens for their first child and introduced paid maternity leave. They are an interesting group for many reasons, not least is that they are the last Soviet generation. They have no illusions about the Soviet Union: they remember the bread queues and ration coupons for pasta. They were also the first group of Russian kids to rush home after school to watch Disney cartoons. These Russian baby boomers originally found their self-expression solely through consumerism, but once they had gorged themselves, they started looking around and wondering. They asked questions like: Where do my taxes go? Why is such a long wait at the doctor's office? And then they asked: What can I do to make things better? Around 2008, the baby boomers began having kids. From 2007
RUSSIA BEYOND THE HEADLINES IS PRODUCED AND PUBLISHED BY ROSSIYSKAYA GAZETA (RUSSIA), WHICH TAKES SOLE RESPONSIBILITY FOR THE CONTENTS. INTERNET ADDRESS WWW.RBTH.RU EMAIL UAE@RBTH.RU TEL +7 (495) 775 3114 FAX +7 (495) 988 92 13 ADDRESS 24 PRAVDY STR, BLDG 4, FLOOR 12, MOSCOW, RUSSIA, 125 993 EVGENY ABOV PUBLISHER PAVEL GOLUB CHIEF EXECUTIVE EDITOR DMITRY GOLUB EDITOR LARA MCCOY GUEST EDITOR ANDREY ZAITSEV HEAD OF PHOTO DEPT ANDREI SHIMARSKY ART DIRECTOR MILLA DOMOGATSKAYA HEAD OF PRE-PRINT DEPT IRINA PAVLOVA LAYOUT TO ADVERTISE IN THIS SUPPLEMENT CONTACT SALES@RBTH.RU
to 2011, birth rates shot up by 20 percent, and this is where the roots of protest movement really began. Pregnant women went to the Ministry of Education to argue for better maternity benefits; parents protested because there were no places in kindergartens; and signatures were collected for petitions against modified foods. These early protests showed that the Russian baby boomers knew what they wanted for themselves and for their families — and how to organize to get it. This striving toward selfawareness is a specific feature of Russian baby boomers; it is a striving toward conscious choice, conscious activities and a conscious life. The baby boomers have a completely different definition of success in life than their parents and grandparents had. For the baby boomers, success means self-expression; a career is a job that is both useful and meaningful. This
attitude has lead the baby boomers not only to protests, but also to volunteering and charity projects, often organizing their activities through social networks. Like the American baby boomers who came of age in the 1960s, the Russian baby boomers are taking a hard look at the priorities of the previous generation and this reappraisal of priorities is already being reflected through shifts in culture and art in addition to political and social changes. Currently, the largest population group in Russia, with 13 million members, is people over 70. In a few years, these baby boomers will overtake them. If they can engage the group that is currently between the ages of 22 and 26, they will constitute a massive force capable of effecting unbelievable change. Alexandra Shevelyeva is a columnist for RIA Novosti.
© COPYRIGHT 2012, FSFI ROSSIYSKAYA GAZETA. ALL RIGHTS RESERVED. ALEXANDER GORBENKO CHAIRMAN OF THE BOARD PAVEL NEGOITSA GENERAL DIRECTOR VLADISLAV FRONIN CHIEF EDITOR. ANY COPYING, REDISTRIBUTION OR RETRANSMISSION OF ANY OF THE CONTENTS OF THIS PUBLICATION, OTHER THAN FOR PERSONAL USE, WITHOUT THE EXPRESS WRITTEN CONSENT OF ROSSIYSKAYA GAZETA IS EXPRESSLY PROHIBITED. TO OBTAIN PERMISSION TO REPRINT OR COPY AN ARTICLE OR PHOTO, PLEASE PHONE +7 (495) 775 3114, OR EMAIL UAE@RBTH.RU WITH YOUR REQUEST. RBTH IS NOT RESPONSIBLE FOR UNSOLICITED MANUSCRIPTS AND PHOTOS. E-PAPER VERSION OF THIS SUPPLEMENT IS AVAILABLE AT WWW.RBTH.RU
SPECIAL SUPPLEMENTS AND SECTIONS ABOUT RUSSIA ARE PRODUCED AND PUBLISHED BY RUSSIA BEYOND THE HEADLINES, A DIVISION OF ROSSIYSKAYA GAZETA (RUSSIA), IN THE FOLLOWING NEWSPAPERS: GULF NEWS, UAE ● THE DAILY TELEGRAPH, UNITED KINGDOM ● THE WASHINGTON POST, THE NEW YORK TIMES, THE WALL STREET JOURNAL, UNITED STATES ● SYDNEY MORNING HERALD, THE AGE, AUSTRALIA ● LE FIGARO, FRANCE ● SÜDDEUTSCHE ZEITUNG, GERMANY ● EL PAÍS, SPAIN ● LA REPUBBLICA, ITALY ● LE SOIR, BELGIUM ● EUROPEAN VOICE, EUROPEAN UNION ● DUMA, BULGARIA ● POLITIKA, GEOPOLITIKA, SERBIA ● ELEUTHEROS TYPOS , GREECE ● ECONOMIC TIMES, NAVBHARAT TIMES, INDIA ● MAINICHI SHIMBUN, JAPAN ● CHINA BUSINESS NEWS, CHINA ● SOUTH CHINA MORNING POST, CHINA (HONG KONG) ● UNITED DAILY NEWS, TAIWAN ● LA NACION, ARGENTINA ● FOLHA DE S. PAULO, BRAZIL ● EL OBSERVADOR, URUGUAY ● TODAY, SINGAPORE ● JOONGANG ILBO, SOUTH KOREA. EMAIL INFO@RBTH.RU. MORE DETAILS AT HTTP://RBTH.RU/ABOUT
08
RUSSIA BEYOND THE HEADLINES WWW.RBTH.RU GULF NEWS_WEDNESDAY_DECEMBER_05_2012
Feature
Celebrities Russian tennis star shows that she has a life off the court
Sport Russia aims for global rugby elite
Maria Sharapova serves up a new treat
Rugby enthusiasts hope for a big leap forward
ITAR-TASS
Next year Russia will host the Rugby Sevens World Cup, an event organisers hope will inspire a new generation of players and fans, and encourge more government aid for the sport. LEO ZAITSEV SPECIAL TO RBTH
Russian rugby didn't have much to celebrate after this weekend's HSBC Rugby Sevens World Tournament matches in Dubai. The Russian Bears lost every match in their pool and went out in the quarter-finals of the second round of the series. These results were par for the course for the Russian team, which took part in the rugby World Cup for the first time last year, but lost all four of its matches and finished last in its group.
Russian rugby fans cheer the Wallabies and the All Blacks, but only a few know the schedule of the national team.
The Sugarpova candies are available in a wide range of flavours and colors.
SVETLANA BORISOVA RUSSIA BEYOND THE HEADLINES
The Russian team approached the 2011 Cup by embracing the Olympic creed: "The most important thing in the Olympic Games is not to win but to take part ... " That the team made it to the World Cup's final stage was a huge achievement for a country where rugby continues to be viewed as an exotic sport. Next year, Moscow will host the Rugby Sevens World Cup, and although Russia has never played host to such a high-level rugby tournament, the government is worried about how to get fans to come out. Dmitry Shmakov, Russian Rugby's director of development, said: "The fans are our first priority. Moscow is overflowing with all kinds of entertainment and it will be very hard to fill the stands. We are currently working on this and we have a number of activities in the works, including a music festival. The tournament is expecting somewhere in the region of 10,000–15,000 foreign fans. W e a r e hoping that Russian f a n s will show up, too.”
Candy can be both fun and fashionable — two adjectives that fit easily with Sharapova's personality and image. The new business also has a broader aim – part of the proceeds will go to the Maria Sharapova Foundation, which works with victims of the Chernobyl disaster. The gummy candies will be sold on the Internet at Sugarpova.com and in the boutiques of luxury hotels all over the world for $5 per pack. The candies will also be available in hotel minibars – a specific request from Sharapova, who is frequently on the road.
Russian players to watch in 2013 Although better known as the girlfriend of Russian ice-hockey superstar Alexander Ovechkin, Maria Kirilenko enjoyed a fine season in 2012. She narrowly missed out on a bronze medal at the London Olympics; she lost to Sharapova in straight sets in the semi-final, and then to Belorussian Viktoria Azarenka in the bronze-medal match. Nadia Petrova is another Russian worth watching in 2013. She is
ranked inside the top 20, but if past performance is an indication. Although two other well-known players, Vera Zvonareva and Svetlana Kuznetsova, are suffering from injuries, there is depth in the women's contingent. This may be the year for Anastasia Pavlyuchenkova. At 21, she is talented and powerful, was ranked 13 in 2011, but fell to 35 after a disappointing 2012.
GETTY IMAGES/FOTOBANK
In August, Maria Sharapova bolstered her credentials as a shrewd businesswoman with the launch of Sugarpova, a line of luxury gummy candies.“It’s the most exciting project I have ever been involved in,” Sharapova said at the launch, which took place in New York just before the 2012 US Open, “because it’s my business, my investment, my money.” Sharapova is known to have a sweet tooth, and it was reportedly while researching the makeup of gummy candies that she began thinking about developing her own. Candy can be both fun and fashionable – two adjective that fit easily with Sharapova’s personality and image – and, perhaps more importantly, gummy candies are not associated with any particular brand. “I couldn’t find anything like it on the market,”Sharapova said, “so I decided to make my own candies, kind that that girls like me go crazy for.”The sweets, which are produced by a manufacturer in Spain, are available in 10 different flavors and come in various playful names and shapes — including the shape of tennis balls — all in attractive packaging. Although Sharapova is the proprietor of the line, she partnered with industry expert Jeff Rubin to develop the product. Rubin is the founder of international distributor It’Sugar. The It’Sugar stores in the Mall of the Emirates and the Mirdif City Centre in
Dubai will be the first places local fans can buy the Sugarpova candies after the brand launches in the UAE, hopefully next year. In October, speaking about the brand's future, Sharapova told the local press:“I hope we can launch in Dubai very soon. I think next year will be a really big step in us going into different markets.”
R e c o m m e n d s
Expo Centre Sharjah 17-19 December 2012
FIND OUT THE PROGRAM OF THE EVENT
rbth.ru/follow-us
REUTERS/VOSTOCK-PHOTO
Although Russian tennis star Maria Sharapova’s name and face appear on plenty of global brands, the 25-year-old Siberian native never had a product that was exclusively her own – until now.
Russian rugby is paradoxical in that as much as people love it, hardly anyone comes out to watch the matches. Russian rugby fans cheer the Australian Wallabies and New Zealand's All Blacks, but only a few know the match schedule for the national team. Alexei Sokolov, chairman of the board of Zenit Bank and a rugby fan, said: “Russian state corporations are pouring huge amounts of money into football (soccer) and hockey. At the same time, far less money is required to advance rugby in our country, especially among children. We need government support to do this. Look at Italy — (former prime minister) Silvio Berlusconi has turned rugby into an elite sport in just 10 or 15 years.” Mr Sokolov has been the chief patron of Russian rugby in recent years. His bank finances the national team and in 2008 he founded the National Charitable Foundation for the Development of Children’s Rugby. Ian Hill, New Zealand’s ambassador to Russia, is one of the fund’s sponsors. “When we tell the government about rugby, we try to get across the fact that rugby can tackle a lot of social challenges, such as providing youngsters in regions with something to do. Rugby is a great sport for just this purpose. It tempers you, while also being a sport for everyone. And it is practically free to play when you compare it with other sports,” Mr Sokolov said. His bank became the chief sponsor for the Rugby Sevens World Cup, donating €500,000. But the real dream for Russian rugby fans is for their country to be the World Cup holders, and doing so will require much more investment, first and foremost, from the government. The Football World Cup, which will take place in Russia in 2018, could change things. But for this to happen, the new stadiums would have to be able to accommodate both football and rugby. There needs to be a 10-metre-long space of grass for the in goal area and equipment.The future of rugby in Russia could depend on these notorious 10 metres.
Russian Vasily Artemyev takes a high ball during a World Cup match.
Use your favorite way to read RBTH.ru
Find news from Russia in your inbox!
rbth.ru/subscribe
russiagccbusinessforum.com
Organisers: Russian Business Council in Dubai and Northern Emirates, Sharjah Chamber of Commerce & Industry, Russian Chamber of Commerce and Industry, Russian-Arab Business Council
Now in Google Currents and Pulse
SUBSCRIBE to top weekly news