Aviation
EU-Russia
Russia’s aviation industry has struggled since the USSR collapsed. Now it goes global with the Superjet
Former German foreign secretary say it is for Russia to choose whether to co-operate with the EU or distance itself
PAGE 5
PAGE 6 PDPA
WWW.SUKHOI.ORG
A paid supplement from Rossiyskaya Gazeta (Moscow, Russia), which takes sole responsibility for the contents
Distributed with European Voice
WEDNESDAY, 20 JULY 2011
International trade Post-Soviet troika dismantles internal barriers to trade, capital and labour
‘Eurasian Union’ to kick off in 2013 and labour among member states. Creating a single economic space will not only bring the former Soviet states closer, Putin said, but it could serve as a buffer against global economic crises and a safe haven for potential investors. The new Eurasian union represents the latest stage of integration in the economies of Russia, Belarus and Kazakhstan, which are already locked in a customs union that became fully operational on 1 July. Putin said the principles and rules governing the WTO were taken into account during the formation of the customs union to enable businesses from WTO member states to work in a clear and predictable environment. But creating a common economic union does not mean that Russia will jettison its goal to join the WTO.
Putin admits that economic planners in the new customs union will need time to adjust to what he promises will be a highly competitive environment. TAI ADELAJA
ITAR-TASS
RUSSIA PROFILE
Prime Minister Vladimir Putin was feeling optimistic and poised for even greater leaps on 12 July as he announced the latest stage in the reconstruction of the former Soviet economic space. “As early as next year we are hoping to sign a declaration on the formation of the Eurasian Economic Union, which can and must start operating as early as 2013,” Putin told journalists on the sidelines of a forum devoted to the new customs union comprising Russia, Kazakhstan and Belarus. The Eurasian Economic Union is expected to ensure the free movement of goods, services, capital
Putin makes clear who will be the central figure of the Eurasian customs union.
Civil society Highway plan stirs up a hornets’ nest
A swelling chorus of angry voices Growing outrage at both environmental damage and the erosion of civil rights has bred a new type of activist – and one who wins votes. VLADIMIR RUVINSKY RUSSIA NOW
Several years ago, the name ofYevgenia Chirikova, a resident of the town of Khimki outside Moscow, was known to few people outside her circle of friends and family. She was a 30-something mother, focused on her children and her career. Ambitious by nature, she earned three college degrees and ran a small business with her engineer husband,
and had no interest in politics. “I didn’t think it was possible to change anything, so politics seemed a senseless endeavour,” she says. Chirikova, now 34, could pass for a student in her jeans and T-shirt. She doesn’t look like a person who commands the attention of a broad spectrum of opposition parties and movements.Yet a metamorphosis from suburban working mother to one of Russia’s best-known activists occurred after Moscow city government decided to bulldoze the forest by her house to build a highway to St. Petersburg. She became interested in the
forest’s fate after the birth of her second daughter: “Suddenly I had time to look around, and I realised that while I was working and paying taxes, somebody else was using that money to destroy my habitat.”Chirikova gathered local residents together and spoke out in favour of rerouting the highway; ecologists later came up with 11 alternative routes. Bureaucrats reacted to this initiative with bewilderment, while many local residents were suspicious: an international multibillioneuro project had never been stopped by a forest before. “The Khimki administration didn’t understand what we wanted,”she explains.“‘If you want to live in the woods,’ they said, ‘go to Siberia.’” CONTINUED ON PAGE 3
MONTHLY SUPPLEMENT ABOUT Politics, economics, business, comment and analysis
CONTINUED ON PAGE 4
Politics Industrialist puts up a bold three-point attempt
Prokhorov: Our goal is to govern Russia New Jersey Nets owner reverses the long-term trend for oligarchs to stay well out of politics. And the Kremlin likes it.
ANNA ARUTUNYAN THE MOSCOW NEWS
The Kremlin’s ambitious privatisation programme has received an apparent boost with the election of billionaire Mikhail Prokhorov to lead the Right Cause pro-business party. Prokhorov, 46, was elected leader of Pravoye Delo, or Right Cause, on 25 June. He ran unopposed. Kremlin-friendly circles that ex-
perts say are poised to challenge for more power in this autumn’s parliamentary elections. President Dmitry Medvedev’s chief economic adviser, Arkady Dvorkovich, made a link between political pluralism and economic modernisation. “We need greater political competition,”he told investors. “We see that new political forces are entering the arena, politicians are becoming more active. This can allow us to hope that new decisions will be made,” he said. CONTINUED ON PAGE 3
INSIDE Debt crisis Greek default threatens EU
DMITRY DIVIN
COMMENT
PAGE 7
Ukraine Kiev feels the squeeze POLITICS
PAGE 2
Charity Persuading a sceptical public SOCIETY
PAGE 8
MODERN RUSSIA EVERY LAST THURSDAY IN EUROPEAN VOICE
29 SEPTEMBER
RBTH.RU
02
Politics
RUSSIA NOW WWW.RBTH.RU 20 JULY 2011 SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA
Russia’s neighbours Ukraine eager to keep its distance from former master
COMMENT
Moscow maintains the pressure on Ukraine
It’s time to unthaw Poland-Russia ties Dimitry Babich SPECIAL TO RN
Non-aligned Ukraine will continue its co-operation with NATO, high Ukrainian officials have confirmed in recent days.
T
SUSANNE SPAHN
Russia is following the cooperation between Ukraine and the North Atlantic alliance with suspicion. A source of particular displeasure was the ‘Sea Breeze’ joint naval manoeuvres in the Black Sea, during which the US warship Monterey approached the territorial waters of the Russian Federation. This was sharply condemned by the Russian Foreign Ministry as “a security threat to Russia”. However, this scenario of an ice age between Moscow and Kiev does not date from the period when the Orange Revolution leaders were intent on steering Ukraine on a westward course. This was the end of June 2011. In Kiev, PresidentViktorYanukovych, who has long been considered a friend of the Kremlin, is now in power.
Reluctant to join up “The power is new, but the actions have not changed,” Vladimir Sharichin, deputy director of the Russian Institute of CIS States, remarked during a talk at RIA Novosti in Moscow. As Yanukovych rose to power, Sharichin said, great hopes for change awoke in Russia, but these remained unfulfilled. “The motto was once: We shall go to Europe, because Russia is bad. Now the motto is: We shall go to Europe, because Russia is good, but Europe is better.” Ukraine gives the same answers, merely changing its justifications, Sharichin asserts. He points to the fact that the government headed by Yanukovych has not designated Russian as an official language of Ukraine. Integration with its Commonwealth of Independent States neighbours, and especially into the customs union, still remain a distant prospect for Kiev. The refusal of Ukraine to join the customs union with Russia, Kazakhstan and Belarus represents yet another source of current tensions between Moscow and Kiev. Ukraine is prepared to cooperate with the customs union in a ‘3 plus 1’ constellation, but would prefer not to officially join. Such an arrangement would be hard to reconcile with full membership in the WTO. Nobody in Russia understands what ‘3 plus 1’ means, Sharichin says, explaining the Russian stance.“Ukraine
ALEXANDR MIRIDONOV_KOMMERSANT
RUSSIA NOW
Medvedev and Yanukovich can always chat amiably about old cars, but when the talk turns to security, energy and trade, the Ukrainians are showing a mind of their own.
must make a decision.” The negotiations between Ukraine and the EU on a free-trade zone are an additional thorn in Russia’s side. As Sharichin sees it, especially in respect to the large-scale industrialists in eastern Ukraine who constitute the economic power base for Yanukovych and his party, the EU is“favourable for sponsors of the Party of Regions”.
From Kiev, a gas price of $350 per 1,000 cubic metres looks unsustainable. “There has been no progress,” agrees Mikhail Pogrebinsky, director of the Kiev Centre for Political Studies and Conflictology. Ukraine expects initiatives from Russia as well – investments above all. Nothing has happened for a year since a deal was struck to boost Russian investment
in Ukrainian industry, Pogrebinsky says. In his view, Ukraine has learned from the example of Belarus that, notwithstanding membership in the customs union, Russia has not offered assistance during the financial crisis.“Big Brother is watching the nightmare, but does not choose to help.” Demands for the restriction of European integration raised by the Russian government are not acceptable in his opinion. “Ukraine would like to become a part of Europe.”
Moscow has shed its illusions Another point of incessant contention is the price of natural gas. Admittedly, since April 2010 Ukraine has enjoyed a discount of 30%, while in recompense Yanukovych’s government prolonged the lease agreement with Russia for the Black Sea Fleet in the Crimea. Nonetheless, during the third quarter of 2011 the price of gas rose to $350 per
Russia eyes Gazprom-Naftogaz merger In 2009, Russia and Ukraine signed a package of agreements that granted Kiev a 30% discount on Russian natural gas (but not more than $100 per 1,000 cubic metres). According to the Ukrainian Energy Ministry, the current price is $296 per 1,000 cubic metres and is constantly growing. The target price for the third quarter of this year is $350, and the price for the fourth quarter may exceed $400. The Ukrainian government claims these prices are unreasonably high. “Our position is firm: the
current formula yields an inflated gas price, not only in the case of Ukraine alone but also when compared to the prices Gazprom’s European customers pay,” said Yevhen Bakulin, head of the Ukrainian gas company Naftogaz. Moscow is willing to renegotiate the contract under a stringent condition: merger of Gazprom and Naftogaz. Gazprom will talk with the Ukrainians “only with the understanding that it will be one company”, Gazprom CEO Alexei Miller said after meeting Ukrainian counterparts in late June.
1,000 cubic metres. Kiev finds this price untenable and has demanded a larger discount. The Kremlin is only prepared to make concessions provided that Ukraine joins the customs union. On top of that, Gazprom would like to force through a fusion with Naftogaz, the state energy concern in Ukraine, thus acquiring control over the transit routes for oil and gas through Ukraine to the West. Here Ukraine finds itself at odds with both Russia and the EU, as Brussels has expressed its interest in modernising the pipeline network. “Russia and the EU are engaged in a battle for Ukraine,” argues Sergei Shilzov, the director of the CIS Centre at the Diplomatic Academy of the Russian Foreign Ministry. In his view, the expectations directed at Yanukovych as a pro-Russian statesman were unrealistic. Moscow has shed its illusions and by its own admission does not anticipate any speedy breakthroughs regarding these points of contention. Nevertheless, the minimal demands of the Kremlin are still:“Ukraine must remain neutral and not coerce EU expansion.” From the Ukrainian perspective, on the other hand, Russia has not undertaken enough to provide Kiev with a viable alternative to the EU. “Not only big business is European, the elite is, too,” political scientist Pogrebinsky says. “It is easier for young people to get a grant to study in Dublin than at a Moscow university.” Susanne Spahn is a freelance journalist in Moscow.
he success of Poland's EU presidency, which began on 1 July and runs through the end of the year will in many ways depend on the country's relationship with Russia. First, because the main Polish EU project for its turn in the chair, the Eastern Partnership, deals with eastern Europe, and eastern Europe is unthinkable without Russia. Second, the looming Middle East crisis connected to the unilateral declaration of a Palestinian state, possibly in September, will make co-operation with Russia, a long-time ally of Palestine, indispensable. Third, Poland’s relations with Russia may enter into the dialogue on European security owing to the possible deployment of the United States’ anti-missile system on Polish soil. On the first issue, Poland is a great supporter of integrating its eastern neighbours into the EU – with the notable and regrettable exception of Russia. Poland plans to make a big event out of the summit between the EU leaders and the heads of the Eastern Partnership’s member states. The leaders of Ukraine, Azerbaijan, Georgia, Armenia and Moldova are sure to attend. A question looms over the attendance of the Belarusian president, Alyaksandr Lukashenka, ostracized by the EU for human rights abuses and in bitter conflict with his Ukrainian counterpart Viktor Yanukovych. Russia, although not opposing the idea of the Eastern Partnership, has expressed scepticism about its success. The logic of these doubts can be made clear by two questions. If the Eastern Partnership is a community of east European economies, then why was such a major economy as Russia excluded? And if it is a community of east European democracies, then what is Lukashenka doing in it? Historically, the cautious (to put it mildly) attitude of Poland to Russia’s European ambitions has been a hindrance to many European projects. In the early 2000s Russia suggested using Polish territory to build a link between two major pipelines transporting Russian natural gas to central Europe via Poland and Slovakia. The Polish“no”was pure-
ly political – Warsaw was concerned for Ukraine’s “energy independence.”The result was the decision by Russia to construct the Nord Stream and South Stream pipelines in the Baltic and Black seas – to the even greater (and this time justified) frustration of Poland and Ukraine. In fact, Poland and Ukraine have themselves to blame for their frustration in the first place – their suspicious attitudes towards Russia forced Moscow to undertake risky and costly sea construction projects. In recent years, relations between Poland and Russia have improved – but this improvement resembles more a shaky thaw at the end of winter than a full-fledged spring or hot summer. Russia confirmed Stalin’s responsibility for the murder of 20,000 Polish POWs in the Soviet Union in 1940 – a secret crime, which the Soviet Union denied until 1990. Moscow prefers not to make a scandal out of the shipment of
The success of Poland's EU presidency will depend on its relations with Russia.
Conspiracy theories and Russia-bashing are not in the inerest of Poland or the EU. American missiles and the sales of American fighter planes to Poland. However, the Polish military and political class make almost no effort to conceal their real “potential targets” to the east of Poland’s borders. So, a lot will depend on the Polish strategists’ sense of measure and tact. This is the first Polish presidency in the seven years since the country joined the EU, so Poles are both nervous and proud. Improvement of relations with Russia will lessen the nervousness and ultimately give more reasons for pride. Continued conspiracy theories around the plane crash that killed the Polish president and his aides in Smolensk last year and more anti-Russian outbursts may serve some Poles’ pride – but not for long, not in the right way and not in Poland’s or the EU’s interest. Dmitry Babich is a political analyst at the RIA Novosti news agency.
Politics
RUSSIA NOW WWW.RBTH.RU 20 JULY 2011 SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA
03
But the would-be activist did not realise what she was getting into:“I was so naïve at first. I thought this highway must be some mistake.” During the conflict over the Khimki Forest, 10 activists were injured by unknown assailants. Chirikova, too, received anonymous threats, but she refused to give up.
No future in fear Some people thought she must be crazy; others that she was an aspiring politician trying to make a name for herself, or else they suspected that she had a commercial interest in the deal. “It’s the bureaucrats who turned me into an opposition leader,”she says.“I became a citizen very late, at 30.” She and her husband Mikhail own two companies specialising in electromagnetic shielding equipment. Mikhail manages both companies while Yevgenia devotes her time to the forest. Recalling the threats against activists, she says, “Every time [someone was beaten up], I said to myself, ‘One more time and I’ll run away.’ But you can’t spend your life running away. If we’re afraid, then we’ve lost.” Her many exchanges with bureaucrats, who told her that the highway was a federal project and therefore not subject to change, did nothing to increase her confidence in the powers-that-be.“I grew up fast,” she says. Prime Minster Vladimir Putin, who, as president, had shifted the construction of a new oil pipeline further
Influential ally One of the people who doubted Chirikova’s chances of success was Alexei Navalny, a lawyer and blogger who has made his name fighting corruption in state companies. Several years ago, when he was a member of the liberal party Yabloko, “People came to me complaining about the construction of a highway in Khimki,” he says. “My answer then was that it was senseless to get involved. They would put together an initiative group and then all be beaten up. Now I see how wrong I was.”
ITAR-TASS
from Lake Baikal, approved the construction of the highway in 2009.That same year Chirikova, with the opposition’s support, ran for mayor of Khimki on a single platform – the rerouting of the highway. She came third, but the wide range of beliefs among her supporters shows that there is a demand in Russian society for specific problems to be solved, says Alexei Mukhin, head of the Centre for Political Information. “That’s why traditional opposition movements, afraid to switch from slogans to actions, are losing popularity,”he adds.The fight for Khimki Forest ended in a decision to narrow the route and prohibit commercial construction either side of the highway. Today, Chirikova pins most blame for the destruction of the forest not on Russian bureaucrats with“their sleepy views of ecology”,but on foreign construction partners in the project.
CONTINUED FROM PAGE 1
PHOTOXPRESS
A swelling chorus of angry voices
The recent ‘Anti-Seliger’ meeting grew out of the activism of people like Alexei Navalny and Yevgenia Chirikova.
THE POLLS
What do you think is more important?
LEVADA CENTER POLL, MAY 2011
Today, he is an active supporter of the Khimki movement, and helps members make sense of the competitions to build the highway, in which, according to Elena Panfilova, head of the Russian branch of Transparency International,“corruption is a large component”. Like Chirikova, Navalny became famous through actions rather than words, defending the rights of minority shareholders in large state companies. They are the same age; neither is affiliated with any political party; both prefer to work independently as activists, attracting supporters from
across the political spectrum. They are a new kind of opposition in Russia, orientated toward solving real problems, says Nikolai Petrov of the Moscow Carnegie Centre.“If withYevgenia it’s the transformation of a civil position from a private protest, then Alexei targets political activity at the outset,” he says. Chirikova“didn’t plan to go into politics; she was pushed into it by the local authorities”, Mukhin says, adding that both she and Navalny“have the image of a popular leader responding to public despair”. The pair are now ready to
Prokhorov: Party goal is to govern Russia And Right Cause’s previous slogan – capitalism for all – would have to go, Prokhorov said.“It’s not true, it doesn’t happen that way,”Prokhorov was quoted as saying.“Capitalism is for people who like risk, and a fair government must offer people social guarantees and support.” Instead, Prokhorov said his party has a clear and ambitious agenda:“to get into the State Duma with the
CONTINUED FROM PAGE 1
ment, such as Finance Minister Alexei Kudrin and Dvorkovich, are calling for. If Right Cause earns a place in the Duma, it could be the party to push ahead with the bolder social and economic steps that are being discussed as part of the Kremlin’s long-term development programme, said Nikolai Petrov, a political expert with the Carnegie Moscow Centre. “I think the Kremlin’s logic is that a liberal force should play the role of a kamikaze – heading a government that will carry out unpopular measures and then be replaced.What Prokhorov has been saying could play a role in this context,” Petrov said.
Not the opposition AFP/EASTNEWS
After his election as Right Cause leader, Prokhorov said he plans to make the liberal party the “second party of power”after Prime Minister Vladimir Putin’s United Russia party. Prokhorov’s candidacy for the leadership of Right Cause – a pro-business party that some critics see as having been hand-crafted by the Kremlin – had been in the works for weeks. His move marks the first time that big business has openly entered the political arena since Yukos chief Mikhail Khodorkovsky’s failed attempts in 2003. After the party vote, Prokhorov, who has previously called for a 60-hour working week, shied away from targeting a purely business-oriented constituency. It wouldn’t be right, Kommersant quoted him as saying, “to be a party of business and the intelligentsia”.
highest possible number of votes”. Its voters are “heads of families – men and women who make important decisions every day”.He added that if he were offered Putin’s job as prime minister, he would not refuse. That agenda, some analysts said, positions the party to carry out some of the less popular market reforms that key liberals in the govern-
After launching the Yo-mobile hybrid car, Prokhorov now aims to drive the Russian economy.
Prokhorov made it clear that, while a renewal of the political system was necessary, he had no intention to oppose the status quo. “We need to remove the
word ‘opposition’ from our lexicon,”he said, Kommersant reported.“Because for our citizens, opposition is associated not so much with political parties as with marginal groups that have long lost touch with reality.” And in a clear break from the more opposition-minded rhetoric of previous
“We need to remove the word ‘opposition’ from our lexicon,” says Prokhorov. Right Cause leaders – who included members of the Union of Right Forces – Prokhorov said there was nothing wrong with forming a coalition with United Russia if both parties have similar views on some issues. Analysts say this fits in with the government’s re-
share their experience. In June, they participated in a four-day workshop in the Khimki Forest that attracted more than 3,000 people. Dubbed ‘Anti-Seliger’ in a tongue-in-cheek reference to the annual gathering of the pro-Kremlin youth group Nashi at Lake Seliger in the Tver region, the Khimki workshop succeeded, says opposition politician and participant Boris Nemtsov, because it drew people of different views and different walks of life. Chirikova says the organisers plan to make the AntiSeliger workshop an annual event.
ported role in closely monitoring the party’s formation. “Things like this are always approved and agreed in advance,” said Olga Kryshtanovskaya, a sociologist and a coordinator of United Russia’s liberal wing. Prokhorov’s announcement in May that he was interested in the post was reportedly preceded by meetings first with Medvedev and then Putin. Medvedev, who had earlier touted Kudrin as a good candidate to lead Right Cause, told Moskovskiye Novosti in an interview on 23 June that Prokhorov had “both strong and weak sides” as a leader, and that it was too soon to tell how he would fare with Right Cause. A c c o rd i n g t o K ry s h tanovskaya, these approaches to Prokhorov fall in line with government plans to widen the circle of loyal political forces. During a meeting with Prokhorov on 27 June, Medvedev called some of his ideas “revolutionary”, RIA Novosti reported.
04
Economy
RUSSIA NOW WWW.RBTH.RU 20 JULY 2011 SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA
Energy As the Baltic pipeline nears completion, dispute with EU could hold up Russian Black Sea gas scheme
Russia is demanding relief from the EU’s new liberalised gas regime and threatening to hold up the South Stream pipeline project. NIKITA DULNEV RUSSIA NOW
Gazprom’s road to Europe was temporarily blocked on 4 July by a German court order to suspend construction of the NEL pipeline, which is due to connect the Nord Stream Baltic seabed pipeline to the European gas transport system.The action was brought by residents of a small town through which the pipeline is to pass. But this is a minor problem for Russia and its European partners, “one that the lawyers should be able to handle”,Mikhail Korchemkin of East European Gas Analysis said. “The main problem is that NEL is covered by the Third Energy Package and, if the partners fail to negotiate an exception for it, similar to that obtained for Nord Stream, the project may be put on
the back burner for a long time.” Beyond the relatively minor issue of NEL, the huge South Stream project to deliver Russian gas to Europe via the Black Sea could also be hobbled unless the EU excludes it from the so-called Third Energy Package – legislation meant to liberalise and inject competition into the
The truth is that Europe and Russia are locked in an intimate energy embrace. gas market. Until this is settled, Russia may be left without the European market and Europe without Russian gas, some analysts warn. “South Stream will go ahead only if it is awarded priority project status. If I were in Europe’s place, I would grant that status”,investment analyst Vitaly Kryukov said. Europe
REUTERS/VOSTOCK-PHOTO
Nord Stream gears up for autumn start
The pipelines that bind: Russia is growing ever more reliant on energy exports to the EU.
stands to benefit from South Stream, he said, adding that the new pipeline would make Russia still more dependent on the European market. Yet Europe is unlikely to make an exception solely for the sake of transporting Russian gas. “There is no rhyme or reason in that. Under European laws, cross-border pipelines within the European Community have to comply with certain principles of the Third Energy Package,” said Mikhail Krutikhin, a partner at RusEnergy. When South Stream was presented in Brussels in
THE NUMBERS
55 billion cubic metres: Planned annual volume of gas deliveries from Russia to Europe via the Nord Stream pipeline
May, Energy Commissioner Gunther Oettinger promised that the European Commission would support the Russian initiative without any strings attached.
Even so, South Stream is currently covered by the Third Energy Package rules prescribing free access to pipelines for all market participants and local regulation of gas prices. The Russian energy minister, Sergei Shmatko, has said he believes the impasse can be bridged soon, with early results perhaps by the autumn when talks with the Commission on the status of the project are planned. Another option is to recognise the pipeline as part of the Russian gas transport system. A number of Russian experts believe that construc-
‘Eurasian Union’ to kick off in 2013, Putin says
PRESS PHOTOX
Russia, like Belarus and Kazakhstan, will continue its attempts to join the world trade body, the prime minister said.“But we don’t intend to accelerate the process and we would not compromise our national interests in doing so,”Putin commented. Russia with its trillion-euro economy is by far the largest country still outside the 153-member WTO. President Dmitry Medvedev said last month there was a “very high chance” that Russia would become a WTO member in 2011, even as he complained about delays in negotiations. However, the minister for economic development, Elvira Nabiullina, said last month that Russian accession to
the WTO could be delayed by several years if there was no agreement on key issues by the end of July. The customs union that binds Russia, Belarus and Kazakhstan came into force on 1 January 2010. The trio took further practical steps toward integration at the beginning of this month by abolishing customs controls on the union’s internal borders and moving customs control of goods and vehicles crossing their territories to what have now become the union’s external borders. It is widely expected that the creation of a common economic space may give private businesses in Russia, Belarus and Kazakhstan a fillip. The three countries, which have some of the best economic potential in the former So-
Capital expansion: Medvedev to double Moscow’s size and relocate most government agencies
viet Union, could see their combined economy improve substantially due to the removal of customs restrictions.
E pluribus unum The latest stage of economic integration has also afforded the Russian prime minister a chance to realise his long-held ambition of bringing together former Soviet states under the tutelage of Moscow. Removing the customs checkpoints “is not just a technical formality”, Putin told his counterparts from Belarus and Kazakhstan. “For the first time since the collapse of the Soviet Union, a step has been taken to restore economic ties within the post-Soviet space,” Putin said. “By removing barriers that ham-
DMITRY AZAROV_KOMMERSANT
CONTINUED FROM PAGE 1
Putin with Kazakh Prime Minister Karim Massimov.
per bilateral trade, a growing and capacious common market with 165 million potential customers has been created. These are good conditions for businesses.” However, despite the huge benefits derived from the
freedom of movement and trade within the customs area, there is a big fly in the ointment. Starting 1 July, all three union members have started to enforce unified customs duties and taxes on vehicles imported by individuals. This means
Subscribe to our free monthly e-paper www.rbth.ru/subscribe
tion of South Stream will not begin unless the project is exempted from the Third Energy Package. Nord Stream, which enjoys a special status exempting it from the package, will start transporting gas as early as October. Another branch will be added next year, increasing capacity to 55bn cubic metres a year, or more than 36% of planned Russian gas exports to Europe. The still more ambitious South Stream project is projected to be capable of delivering 6bn cubic metres per year under the Black Sea by 2014.
that prices of imported cars are expected to rise in Belarus and Kazakhstan – the two countries that had previously enjoyed lower duties on imported cars. Bureaucrats in each of the three member states must also gear themselves up to work in a competitive environment, Putin told the forum. In an apparent swipe at the European Union, Putin said the planned Eurasian Economic Union “will not replace national bureaucracy with supranational bureaucracy”,stressing that while removing internal borders, member countries should not create obstacles that will prevent integration into the global economy. “Business will only select a country with the best conditions and we’re already anxiously … considering how to create better conditions so that business will choose Russia,” Putin said. Originally published in
Business
RUSSIA NOW WWW.RBTH.RU 20 JULY 2011 SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA
05
Aviation Tupolev crash investigation gets under way as next-generation airliner is unveiled in Paris
New Superjet cleared for take-off Russia’s aviation industry, which has been in transition since the Soviet collapse, is back in the headlines – for reasons good and bad. PAUL DUVERNET, DMITRY RODIONOV RUSSIA NOW
Superjet at a glance TYPE: SHORT-HAUL PASSENGER AIRCRAFT WINGSPAN: 28 METRES AFP/EASTNEWS
A fatal plane crash, Kremlin rumblings about drastic steps to modernise fleets operated by regional carriers, and a flurry of orders for new aircraft have thrust Russia’s aviation industry into a patch of intense turbulence. Debates about the correct course for the sector’s growth intensified at an international forum on air transport held in Ulyanovsk in April. Participants heard upbeat forecasts that Russia could corner 10% of the global market. They also heard the president of the Partner for Civil Aviation Foundation, Oleg Smirnov, railing against “all these bankers who now run our industry” – a comment evidently aimed at the Aeroflot chief executive Vitaly Savelyev and the oligarch Alexander Lebedev, a stakeholder in several airlines. Then on the evening of 20 June, a Soviet-built Tupolev Tu-134 airliner crashed on a road near Petrozavodsk in the northwestern Karelia region while attempting to land in heavy fog, leaving 47 people dead. In their preliminary findings, investigators blamed pilot error rather than technical failure, although a formal conclusion has yet to be announced. However, President Dmitry Medvedev promptly ordered a study of whether the ageing aircraft should be withdrawn from service entirely – while stressing that this was nothing to do with the crash.
The Superjet is the first Russian passenger jet entirely developed in the post-Soviet era.
LENGTH: 30 METRES MAXIMUM TAKE-OFF WEIGHT: 45 TONNES
“In the case of scheduled flights, it might be the right thing to ensure they [the Tu-134s] do not fly any more starting from next year,” he said. The Kremlin’s own air fleet also includes the Tu-134. The twin-engined aircraft, and its larger modification, the Tu-154, have been the reliable workhorses of Soviet and Russian civil aviation since the 1960s, with more than 800 planes built. The plane that crashed was built in 1980. The president’s comments were a cause for some concern, since 90 Tu-134s are still in operation with many of the regional carriers that have sprung up in Russia since 1991, according to the Rosaviatsia civil aviation authority. “[In doing this] we will instantly ruin dozens of airlines,” said Viktor Gorbachev, head of the Airport Association, a private civil-aviation lobbying group. “This is the main aircraft
PASSENGERS: 98
Who builds what for the Superjet?
CRUISING SPEED: 827 KPH RANGE: 3,000 KILOMETRES
SOURCE: RIA NOVOSTI
THE NUMBERS
11
years: time lapse between the start of the Superjet project and the new passenger craft’s first regular commercial flights
era (and to use a large number of foreign components, including a Frenchmade engine), recently passed an important milestone when it successfully completed its first commercial flights with the Armenian airline Armavia. The aircraft is also due to go into service with Aeroflot. “We estimate the market volume to be more than 800 planes,”said Mikhail Pogosyan, the United Aircraft Corporation president, who oversaw the Superjet launch. United Aircraft counts Sukhoi among its stable of aircraft. The consortium of companies that builds the Superjet already has 170 orders on its books from Russia, the CIS and Latin America, Pogosyan added.
for domestic regional flights; there’s not much else to fly on,” he added.
Order book grows Meanwhile, Russian manufacturers came away from the Paris Air Show last month with a dozen new orders for the new Sukhoi Superjet 100, an aircraft that is hoped to win favour
among international carriers, and which could potentially replace the Tu-134. Production of the Superjet, together with the larger Tupolev Tu-204, is seen as a key factor in determining the sector’s future. The Superjet, the first Russian plane to be developed entirely in the post-Soviet
Sector unrest The situation is more critical for the Tu-204, a medium-range plane capable of carrying 210 passengers. Having flown for the first time in 1989 and resembling the Boeing 757, the aircraft is having difficulty reinventing itself, given that only 69 have been built in 20 years. An order for 44 aircraft from the airline Red Wings was supposed to kick-start production, but that deal has been in doubt since late April. Participants at the forum in Ulyanovsk, however, struck a mostly optimistic note on the future for Russian aircraft. Pogosyan said 30 Superjets would be built in 2011, up from just seven last year, and that the number was expected to peak eventually at 50-60 a year. He also said he hoped that, with the help of the government aviation industry stimulus programme, Russia could take a 10% share of the global civil aviation market by 2025.
Air travel Passengers praise Aeroflot for its food, on-board WiFi and smart uniforms
Proud Aeroflot not content with ‘best of the rest’ label The Russian flagship carrier is burnishing its image despite having no real competitors in its home skies. ANTON MAKHROV RUSSIA NOW
In the recent SkyTrax international rankings, Russian flagship carrier Aeroflot scored three out of five stars. In this league table, Aeroflot’s neighbours are Delta, El Al, Olympic Air and a number of eastern European and Asian carriers. But while Aeroflot is in the middle of the pack in
the global rankings, domestically it looks much stronger. This year the industry research agency also ranked Aeroflot as the best air carrier in eastern Europe. That ranking is based on a survey of nearly 20 million passengers, so consumer attitudes in particular are the key evaluation criteria. According to SkyTrax, Aeroflot topped its local rivals thanks to its high-tech features, which include mobile check-in, on-board WiFi and – according to passengers – an easy-to-use website.
In addition, passengers liked the uniforms of the Aeroflot flight attendants and the on-board menu (according to the Skyscanner portal, Aeroflot ranked fourth in catering quality among all carriers worldwide). For the sake of tasty meals and web surfing, passengers even forgave Aeroflot for the December collapse at Moscow Sheremetyevo, the company’s home airport, when an ice storm delayed travel for about 20,000 people. Experts, however, have other explanations for Aer-
oflot’s success. According to Dmitry Baranov, an analyst with Finam Management, the answer is simple: Passengers are aware of the Aeroflot brand, whereas many of its competitors are unknown.
A long tradition For nearly 70 years, Aeroflot was the only airline in the Soviet Union and the company still maintains its status as a national leader. The long history of this company also contributes to its brand power. “There were airlines in the US with a similar scope and history, like Pan American. But Pan American went bankrupt long ago while Aeroflot still flies,”Baranov said. A number of Aeroflot’s
three-star rivals, such as Alitalia or Olympic, can compete in terms of brand awareness, but none of the other eastern European carriers is particularly well known. Aeroflot outshines its peers in the region in other ways as well.“In terms of service and fleet profile, Aeroflot is closer to west
Unlike most airlines born in the 1920s, the Russian national carrier is still flying European grandees such as Lufthansa and Air FranceKLM,” said Roman Gusarov, editor-in-chief of Avia. ru.“These companies, rather than smaller regional
carriers, are Aeroflot’s competitors.” Yet Aeroflot still lags behind these global market leaders in the size of its fleet. Today Aeroflot has 100 aircraft of various classes. In comparison, Germany’s Lufthansa – including all its subsidiaries – has a fleet of 710 aircraft. In terms of passenger turnover, Aeroflot also fails to reach the level of the European majors. Aeroflot carries 14 million passengers per year compared with Lufthansa’s 90m and Air France-KLM’s 72m. Experts do not believe Aeroflot will be able to bridge this gap in the coming decade. So Aeroflot remains a bit of an anomaly: the leader in its home region, but no match for its real competition.
06
Opinion
RUSSIA NOW WWW.RBTH.RU 20 JULY 2011 SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA
DIFFERENT VALUES, COMMON AIMS Joschka Fischer FORMER GERMAN FOREIGN SECRETARY
DMITRY DIVIN
W
hat road will Russia take under circumstances which have completely changed in the 21st century? Is Russia strong enough to go this way alone? Does it want or need partners? This is an important decision, as Russia has always been a European factor, since Peter the Great at the very latest, and has always been strongly influenced by developments in Europe. Whether more distance or more co-operation with Europe is required is a question that must be decided by both sides, but most importantly by Russia. The world of the future will be defined by the ascendancy of the large, newly industrialised countries: China, Brazil and India. Russia and Germany, Europe and America – indeed, the entire world order – will not remain unchanged by these developments. The new international economic order will also affect global political systems and the balance of power. One can already see the signs today: Whereas the G8 played a significant role just a few years ago, as the industrialised Western states met informally with Russia, conferred about the international status quo, and debated necessary issues, the latest summit meeting at Deauville in France could no longer be placed in the same category, as the most essential global players were absent. The G16 has come to occupy the place of the G8, with emerging countries and different con-
Both sides must be open about their interests, and their conflicts of interest.
The European position on easing visa rules is extremely shortsighted. tinents. When we address future European-Russian relations, we must use this new framework as a foundation. And, in turn, this necessity will have significant ramifications. To give one example: the per-capita level of consumption we know today will become a
thing of the past. And I shall tell you who the winners will be. The winners will be those nations that have developed the technology for this historic leap and are in a position to provide it. Germany has made the decision to be one of those winn e r s by c h o o s i n g t o relinquish nuclear technology. Russia is a key energy supplier to Europe in both the oil and natural-gas sectors. As far as Europe and the European Union are concerned, this situation will remain unchanged in the future. Domestic energy production in Europe is declining, especially in the North Sea region. The need for natural gas, although it has still been kept at a minimum as a result of the ongoing financial crisis in parts of the EU, will nonetheless increase. However, the European
stance assumes that it is reasonable to ensure our energy supply through a diversification of providers, which means not becoming too reliant upon a single supplier.This does not imply reducing the share drawn from Russia, but rather, this implies not increasing it. A closer and deepened cooperation with Russia would be in the mutual interest of both sides. Ties are open and intensive, but they have by no means attained the level that could be achieved. All the same, this presumes that such co-operation be based upon common interests and values, not upon the notion of ‘strategic zones of influence’. Here, it must be possible to clearly state one’s interests, and one’s values just as well. We in the EU have gained the experience that it is enormously important to
state one’s interests and conflicts of interest openly. Thereafter, one must attempt to find compensations and compromises by means of negotiation. Conflicts of interest lie in the geography of contiguity. Sovereign nations located between Russia and the EU, issues surrounding the so-called post-Soviet order, and the future of Ukraine, are topics being discussed with intensity on both sides. Consider the future of ‘frozen conflicts’ – well, in this context we have learned all too well how quickly a conflict frozen solid can become a heated issue. At the same time, I can identify economic, societal and political potential, if we are prepared to engage with one another honestly and deal openly with existing conflicts of interest. The interconnection of economic structures can become an essential factor in this context. Nonetheless, with increasing frequency I hear the objection that difficulties arise when Russian capital is directly invested in European countries. One example in this regard is the unsuccessful take-over of Opel by Magna. The main problem lies in differences between normative values, and a distrust that exists in Europe, both of which lead to a visceral rejection of such foreign investment initiatives. The EU was not only founded on common interests, but on common values fundamental to our European identity, too. Any progress in respect to the establishment of standards required by the legal state, the autonomy of the justice system, the separation of pow-
ers, and human rights, positively influences economic co-operation, as it has the added effect of reducing such latent, although increasingly common, displays of distrust. At the same time, I cannot ignore the fact that progress has not been made in connection with the visa issue, although progress was certainly within reach. I find the European position in this matter extremely shortsighted, especially in Germany and a few other countries. Experience shows us that the exchange of not only goods and ideas, but of human beings as well, is very important. There are many potential immigrants who certainly deserve an initial stage of leniency, and indeed, on both sides of the borders. The second stage would be total exemption from visa obligations. This will not be an easy step given factors such as borders and immigration regulations. Nonetheless, on the basis of recent experience with the opening of borders in Europe, I believe this measure can also be implemented. During a period in which a small, xenophobic party has been able to compel its larger coalition partner to reintroduce border controls, simply due to the election successes it promised, efforts towards overcoming barriers have assumed decisive importance. This article is an excerpt from a lecture titled “The Future of European-Russian Relations” delivered at the German Historical Museum in Berlin on 30 May.
THE UNJUSTLY FORGOTTEN HEROES OF AUGUST 1991 Konstantin von Eggert JOURNALIST
I
have recently discovered that very few Russians and even fewer foreigners residing in Moscow know about Russian Flag Day. Even fewer remember what led to the establishment of this official holiday (although not a day off). It was first celebrated in 1994 to commemorate the defeat of the August 1991 anti-Gorbachev and anti-Yeltsin coup, and to recall a solemn, yet at the same time hopeful, incident during the coup. On 21 August 1991 Dmitry Komar, Ilya Krichevsky and Vladimir Usov were killed by stray bullets or crushed to their deaths by armoured personnel carriers that were manoeuvering on the Garden Ring, a
circular avenue around the central Moscow. Dmitry, Ilya and Vladimir were among those who tried to prevent the armour from advancing on the White House – the seat of the Russian Federation authorities and main centre of opposition to the coup plotters. It turned out later that the officers and men did not have any direct orders to attack, but on that tumultuous night this was not at all evident. That same night the putsch collapsed. On 22 August, Muscovites came out in their tens if not hundreds of thousands to honour the memory of the three young men. That was when a huge Russian white-bluered tricolour was unfurled over the crowd and brought to the White House where President Boris Yeltsin officially proclaimed it the new state flag of the Rus-
sian Federation, at that time still a part of the Soviet Union. Two days later, the three men were buried with honours while Mikhail Gorbachev posthumously
Pervasive cynicism about the past may be giving way to hope – but very slowly. named them Heroes of the Soviet Union. However, when out of curiosity I googled their names, the hits usually contained questions like,“Who are these people?” or “Do these names say anything to you?”There was more or less the same result with a search for ‘Russian Flag Day’.
Russians seem to have almost completely forgotten one of the most glorious pages in their history. Opinion polls over the last decade or even more show that around half of respondents, when questioned on the events of August 1991, say they were just an“episode” in the “struggle for power at the top”. I would have understood if those events elicited more hatred and despair: the collapse of the Soviet empire was by no means a painless exercise for many, although much smoother than it could have been otherwise. It’s the indifference that baffles me.“Nothing is ever done because of ideas or ideals, but only out of greed or some other form of personal interest” – this is the attitude, assiduously promoted by state-controlled TV, that pervades Russian
society across all boundaries, including age and class distinctions, ethnicity and educational level. None of us who witnessed and participated in the events of that August will ever agree with this cynical assessment. For me, then a rookie reporter on a Moscow city paper, as for countless others, this was the time of hope and idealism, of limitless horizons and an acute sense of history being made in front of and sometimes by you. The idea that the nearly forgotten anniversary of the men’s deaths could be a source of inspiration and pride seems slowly to be gathering force. President Dmitry Medvedev may believe so. He constantly returns to 1991 as a milestone of Russian history. Although they say that appealing to past glories
doesn’t do a Russian politician any good, I am not sure. A growing number of Russians are rejecting the cynicism of the past decades as they look anew at what it means to be a Russian citizen. These people are the future of the country, if it has any. Nothing could or would be more special and moving than if the Russian head of state were to go to Vagankovo Cemetery this coming 22 August and bow in memory of the three young men who died for the cause of Russian freedom. Konstantin von Eggert is a former editor-in-chief of the BBC Russian Service Moscow bureau. Originally published by
Comment
RUSSIA NOW WWW.RBTH.RU 20 JULY 2011 SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA
07
VIEWPOINTS GREEK CRISIS
THE EURO HANGS IN THE BALANCE Like the Russians in the 1990s, Greeks are learning that the climb from the financial abyss will be Alexander Privalov EXPERT MAGAZINE
OLD FAIRY TALES IN NEW CLOTHES
G
Greece is more convincing. But nothing is changing: both the Greek authorities and European officials keep repeating that without new financial resources from the EU and the IMF Greece will not be able to escape a default. But will it escape even then? The Eurobosses, meanwhile, are playing the usual game of keeping mum: whichev-
The PIIGS countries are nervously awaiting the premiere of “The Ruins of Athens”. er official is first to mention this default out loud will also be the first to bear responsibility for it. And there will be a lot to answer for. For a start, the serious difficulties being experienced by a number of strategic banks (mainly French and German), which got carried away with playing the highreturns game with Greek bonds. Then, for the wors-
ening problems in the weak links in the eurozone after Greece (Portugal, Ireland and other stops along the way) and the quite plausible movement towards the collapse of the eurozone itself. In one sense Greece itself (not the government but the country) is risking less than anyone else: it already has virtually nothing to lose. Of course, a default and the sharp slump in living standards that that entails are more than unpleasant, but they are unavoidable. They have to be endured, but it is quite possible that new opportunities will open up in their wake, as they did in Russia after the twin heavy shocks of the default and devaluation in August 1998. And so for other participants in the process the risks are only beginning. Everyone has more or less grown used to the idea that the premiere of the play “The Ruins of Athens” will sharply increase nervousness on the markets of the other PIIGS countries. But the issue is more serious: there is no way to avoid a most unpleasant increasing focus on the little-publicised fact that for the more developed countries too the debt and budgetary burden is clearly rather big. Alexander Privalov is a leading economic journalist and an editor of Expert magazine.
leaders must ponder whether the common currency is worth saving – and at what cost. Stanislav Mashagin ECONOMIST
GREEK TRAGEDY NOT INEVITABLE
N
ot only can Greece keep its membership in the euro area, it can move towards reducing its national debt. The conditions for this to happen are, in every sense, hard both for Greece and the EU. It is unlikely that any country will decide to leave the eurozone in the foreseeable future, because neither the euro debtor countries (mainly the southern tier and Ireland) nor EU institutions such as the European Central Bank and European Parliament would welcome it. These institutions require much time to make important and difficult decisions because of the need to align and co-ordinate with all the eurozone countries, each of which meanwhile must deal with potential counter-actions, if not chain reactions, by banks, insurers, pension funds, and their respective central banks. Technically, the decision to abandon the euro does not seem possible at this time. For that reason, the problem of highly indebted eurozone countries will re-
main common to all of them. The euro is the string that binds up every member of the area from Germany to Ireland. Nothing less than an announcement of Germany’s unilateral withdrawal from the eurozone would be needed to make the “string” system fall apart. There is no sign of that happening. So what can the EU, the ECB and the Greek government do
Europe’s big exporters may not want a quick solution to the Greek crisis. to take control of the situation and find a way out? Their first step should be to take another look at Greece’s external debt. One reasonable and feasible idea is to exchange Greece’s bonds for EU institutional bonds. The ‘no-default debt restructuring’ option, for instance, envisages the use of the eurozone rescue fund,
LETTERS FROM READERS, GUEST COLUMNS AND CARTOONS LABELLED “COMMENT” OR “VIEWPOINT” OR APPEARING ON THE “OPINION” AND “COMMENT” PAGES OF THIS SUPPLEMENT ARE SELECTED TO REPRESENT A BROAD RANGE OF VIEWS AND DO NOT NECESSARILY REPRESENT THOSE OF THE EDITORS OF RUSSIA NOW OR ROSSIYSKAYA GAZETA. PLEASE SEND LETTERS TO THE EDITOR TO EV@RBTH.RU
or EFSF, to exchange government bonds of Greece, Ireland and Portugal placed with foreign holders for EFSF bonds at a discount of 20-30%. This would reduce the national debt of these countries and drastically decrease their financing costs. This scheme also envisages the possibility of a chain reaction where the European financial system would lose up to 10% of its capital base but still survive. The second step is to speed up the privatisation of state property in Greece (and the other heavily indebted countries), which could raise €50 billion or even more. Thirdly, cut Greece’s budget deficit from the current 12.5% (which is more than four times greater than the EU limit) to 9% next year, and still more year by year, through cutting public spending, including reduced payments to households and direct spending for purchasing products and services. The problem of Greece’s debt could be resolved in a ‘natural’ way, so why hasn’t it? Who benefits from the constant media pressure and continually putting off the problem until tomorrow? One answer that suggests itself is that the European exporting countries benefit. Not only don’t they like the current euro/dollar rate of more than 1.4/1, they would like to see it below 1.2. Just as surely, they wouldn’t like to see the euro go into freefall, either. That is why the solution to the eurozone debt problem may need to be stretched out in time and space, to smooth out the bumps. The economies of Germany, France, Holland and Italy need a more efficient exchange rate to be more competitive globally, because they are in the same market as the US and China, whose exchange rate for a number of reasons has never been unbound from the dollar.That’s why we are facing such a tricky situation. Stanislav Mashagin is deputy director general of the investment firm UrsaCapital.
DMITRY DIVIN
reece is not capable of paying off its debts, nor even of servicing them – now or in the future. The“credit in exchange for reforms” programme has not worked. The measures that the EU is forcing Greece to take in order to obtain financial aid are having a seriously depressing effect on the national economy, leading to a further reduction in the money flows it generates. Most of the multi-billion assistance is flowing through the Greek treasury to the creditors who are profiting from Greek bonds in almost the same way as 13 years ago they profited from Russian state treasury bills: the yield on Greek two-year bonds has approached 30%, something never seen before in the eurozone, and it is continuing to rise. Things cannot go on like this for long. It may prove possible to give default another name – in the same way as unrestrained issuing of currency is technically referred to as ‘quantitative easing’ – but there will be no way of avoiding it. This gloomy truth is absolutely obvious, and it is difficult to imagine anyone not knowing it, but the most serious of people – presidents, prime ministers and ministers – continue to act as though they’ve never heard of anything like this. Life today is more complex than it was when Hans Christian Andersen penned his tale of the emperor’s new clothes. Today, there are whole regiments of impudent lads crying at the top of their voice that the emperor is shamefully naked. Not one public analyst would now write off the inevitability of a Greek default. And who needs analytical articles? The terrible CCC sovereign rating that has now been given to
long, and it will hurt. Greece may yet escape default, but as other eurozone economies falter, EU
THIS EIGHT-PAGE PULL-OUT IS PRODUCED AND PUBLISHED BY ROSSIYSKAYA GAZETA (RUSSIA), WHICH TAKES SOLE RESPONSIBILITY FOR THE CONTENTS. INTERNET ADDRESS WWW.RBTH.RU EMAIL EV@RBTH.RU TEL. +7 (495) 775 3114 FAX +44 20 3070 0020 ADDRESS 24 PRAVDY STR., BLDG. 4, FLOOR 12, MOSCOW, RUSSIA, 125 993. EVGENY ABOV EDITOR & PUBLISHER ALEXEY KNELZ EDITOR KY KRAUTHAMER SUBEDITOR ANDREY ZAITSEV HEAD OF PHOTO DEPT. MILLA DOMOGATSKAYA HEAD OF PRE-PRINT DEPT. IRINA PAVLOVA LAYOUT
E-PAPER VERSION OF THIS SUPPLEMENT IS AVAILABLE AT WWW.RBTH.RU. VSEVOLOD PULYA ONLINE EDITOR TO ADVERTISE IN THIS SUPPLEMENT CONTACT JULIA GOLIKOVA ADVERTISING & PR DIRECTOR, ON GOLIKOVA@RG.RU. © COPYRIGHT 2011, ZAO “ROSSIYSKAYA GAZETA”. ALL RIGHTS RESERVED. WWW.RG.RU
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 EV@RBTH.RU WITH YOUR REQUEST. RUSSIA NOW IS NOT RESPONSIBLE FOR UNSOLICITED MANUSCRIPTS AND PHOTOS.
08
Society
RUSSIA NOW WWW.RBTH.RU 20 JULY 2011 SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA
Charity Foundations are increasingly stepping in to fill the gaps in state-provided health and social care
Charitable organisations are still nascent in Russia but have begun to make headway, helped by the emergence of a middle class. ANASTASIA GOROKHOVA RUSSIA NOW
Vladimir Putin looked embarrassed as he took the stage, smiled at Sharon Stone sitting in the front row, stepped up to the microphone and offered a rendition of “Blueberry Hill”. Although visibly uncomfortable, the prime minister went through with his charity performance. At the end of 2010, Putin joined a group of A-list Hollywood celebrities to take part in a benefit concert for child cancer sufferers organised by a charitable foundation. All would have been fine had the existence of the charity, the Federation Foundation, not become first known at that same concert. It transpired later that the foundation had only been set up a fortnight before the event. And a real uproar broke out after the mother of a gravely sick girl alleged in an open letter that the hospital where her daughter was being treated hadn’t received a kopeck from the foundation. At the time, a spokeswoman for the foundation told the press that it held events and encouraged donations but did not collect money. “We don’t even have an account,” she said. Such mishaps tend to undermine the influence of Russian charities, which already face the scepticism of a public that remembers many stories about ‘charitable’ initiatives that served only to line their organisers’ pockets. Lev Ambinder, the founder of the Russian Aid Foundation, said his charity experienced a backlash after critics charged the Federation Foundation of being a phony organisation. The public’s mistrust is also
rooted in the turbulent 1990s. Back then, many charities were set up with the sole purpose of money laundering. The vicious practice of duty-free imports under the guise of voluntary donations was designed to help unscrupulous entrepreneurs evade taxes. After the ‘donations’ cleared customs, recipients were quick to sell them for a profit. The actor Artur Smolyaninov shakes his head in disappointment as he recounts a recent episode he witnessed at a supermarket: A woman murmured as she walked by a donation box for the Give a Life Founda-
Charities can sometimes goad the glacial Russian bureaucracy into action. tion, “Give a life … take a life … What a bunch of bull,” and went on her way. “She didn’t even make an effort to learn what the donations are for,” the actor lamented. He has been a Give a Life volunteer and an honourary member of the charity’s board of trustees since 2006. That woman’s reaction is representative of the general public’s attitude to-
ITAR-TASS (3)
No longer looking the other way
Events such as this benefit concert for the Give a Life Foundation are aimed at both collecting money and restoring public confidence in the idea of giving to worthy causes.
wards charity. “As a rule, people are well-informed of what foundations are up to but don’t want to get involved in other people’s problems,” Smolyaninov said. “The ‘look the other way’ principle has long become a motto for many people. In the past, mothers used to put a hand over their kid’s eyes when a disabled person boarded a public bus.” With this sort of thinking, few are ready to donate money to his charity. On the other hand, many people’s incomes are too low to provide fully even for their immediate family. “Charity kicks in when a person has achieved a certain level of prosperity,”the actor said.
Chulpan Khamatova
THE NUMBERS
€3 million: total giving to the Give a Life Foundation in 2010 – substantially more than to any other Russian charity
“Russians must solve their problems on their own” The European Union has supported more than 70 Russian projects directed at disadvantaged children and the disabled since 2002. However, funding for social initiatives in Russia has been steadily on the decline, from €9m in 2002 to €2m in 2011. Part of the reason is the increasing demands on EU funds from places now less well-off than Russia. Brussels no longer considers Russia a developing country, says Denis Daniilidis, press
Despite their controversial reputation, charities are expanding in Russia. “Russians have started paying attention,” said the economist Irina Yasina, a member of the Presidential Human Rights Council.“In the early 2000s, a public organisation called Open Russia was active in this country; it was essentially the only source of aid to the disabled, and also promoted special educational projects,”Yasina said. Today there is a whole range of organisations that provide wheelchairs to the disabled and prepare special-needs children for a meaningful life in society. “The last few years have seen fundamental changes. We are gradually catching up with Europe,” she said.
Celebrity helpers
and information officer for the EU delegation in Russia. “Russians must solve their problems on their own,” he told a recent press conference. Daniilidis said the EU was confident that Russian charities would be able to take over some of the projects originally launched by the European Commission. The EU also will assist Russian charitable foundations in seeking partners in Europe.
Influential organisations such as Give a Life are trying to restore public confidence in charitable giving. They take care to be transparent and guarantee that donations will actually reach those in need. Prominent public figures on charities’ boards help draw attention to their activities. A notable example is the actress Chulpan Khamatova, who helped found the Give a Life Foundation. Give a Life collected €3 million in donations last year – substantially
Don't miss our "Photo of the day" on Facebook!
more than any other Russian charity. “In the United States, 90% of the population regularly donates to charities,” Khamatova said. “For an American to give a portion of their income to charity is the most natural thing. We can only dream of such an attitude here.” Khamatova is cautiously optimistic: as a new middle class emerges in Russia, its representatives are increasingly prepared to do something for others. The actress believes that many people are driven by a feeling of inner satisfaction to make donations. Khamatova sees promoting charitable giving as one of the most important aspects of her work, because “the state all but ignores this sphere today. The government preaches about the harm of alcohol or tobacco use, but keeps totally mum on the fact that wheelchairbound senior citizens are at society’s mercy.” Give a Life is “a thorn in the side of bureaucrats at the Health and Social Development Ministry”, she said. “We regularly send them petitions criticising absurd laws, such as restrictions on imports of medicines. We sincerely hope to be able to make a difference by helping to revise the government’s health-care and social security policy.”
To advertise in this supplement contact sales@rbth.ru
rbth.ru/letters ev@rbth.ru
www.facebook.com/ russianow
ph. +7 (495) 775 3114