Russia Beyond the Headlines #1 NYT

Distributed with

The New York Times

www.rbth.ru

A Special Advertising Supplement to The New York Times © alexey filipov_ria novosti

Special Report

Business

M.I.T. Professor Headed to Skolkovo

Russian Developers Tap Digital Games Market

P.03

P.04 shutterstock/legion-media

Wednesday, January 25, 2012

This special advertising feature is sponsored and was written by Rossiyskaya Gazeta (Russia) and did not involve the reporting or editing staff of The New York Times.

Protests Russians march in anger over election fraud — but will they change the system?

Can the Street Determine the Road to the Kremlin?

News in Brief Russia Considers Antibribery Convention Bribing foreign public officials may become a criminal offense in Russia if the State Duma passes a law committing the country to the Convention on Combating Bribery of Foreign Public Officials of the Organization for Economic Cooperation and Development (O.E.C.D.). Adopting the convention is a condition for acceeding to the O.E.C.D., but some experts are concerned that signing it will limit Russian commercial interests in countries where bribery is part of doing business.

Read more about anticorruption efforts in Russia on page 6

New U.S. Ambassador to Russia Arrives in Moscow

itar-tass

AP

Protests over election fraud add intrigue to a previously boring presidential race, while authorities announce a sweeping political reform in response.

Artem Zagorodnov special to rbth

On the evening of Dec. 5, several thousand people gathered in the freezing rain in central Moscow to protest alleged fraud in the Dec. 4 State Duma elections.“In the 1990s, we failed to make proper use of freedom,” TV host and writer Dmitry Bykov told a cheering crowd. “It came down from above. But over the past few years, a real civil society has been formed in Russia, and it won’t

disappear. Never before in Moscow was there such a feeling of unity and determination.”

That demonstration was followed by two larger ones, on Dec. 10 and Dec. 24, and recently organizers have been agreeing on terms for the next demonstration, scheduled for Feb. 4. Under banners of “Give us our elections back,” thousands of previously apathetic Russians demanded more freedom and accountability from authorities.

“Two months ago, I had no doubt as to the results of the upcoming presidential election. Now I do,” said Andrei Ryabov of the Carnegie Moscow Center.

When Prime MinisterVladimir

Putin announced in September that he would run for president in the March 4 election, almost no one doubted his return to the position he had held from 2000– 2008. He has been the dominant figure in Russian politics for more than a decade, enjoying genuinely high approval ratings throughout both his terms, first as president and then as prime minister.

But then“something happened that the best sociologists can’t explain,”said Ryabov.“It’s too early to say that the Russian consumer has been replaced by a fully fledged member of civil society, but people are demanding more respect from the authorities.”For

much of the last decade, authorities had relied on seedy tactics such as blocking opposition candidates on technicalities, ballot stuffing and voter intimidation to secure artificially high results for the ruling party, United Russia.

“Some in the government still see society as something to be manipulated, but society has changed.

You can’t cover up these protests with sleek P.R. You need real dialogue,” said Ryabov. Ironically, it’s precisely the middle class that formed under Putin’s decade of record-breaking economic growth that is out on the streets. continued on page 2

Russians gather against alleged vote rigging in the Dec. 4 State Duma elections. While turnout was high for an opposition action in the Russian capital, many doubt that the marches will change the system. Protest organizers have scheduled their next action for Feb. 4.

Michael McFaul, 48, U.S. President Barack Obama’s point man for Russia and one of the architects of the “reset” between Russia and the United States has taken up his new post as U.S. ambassador to the Russian Federation. McFaul arrives at a critical time in U.S.-Russian relations, as the two countries remain in disagreement over missile systems in Eastern Europe, and both countries prepare to elect new presidents.

Before his appointment to the U.S. National Security Council, McFaul taught political science at Stanford University. He is only the second U.S. ambassador to Moscow in 30 years who was not a career diplomat.

Read more on Michael McFaul at http://rbth.ru/14192

Russia Gets Mixed Report Card From Fitch Ratings On Jan. 16, Fitch Ratings, a global rating agency, cut Russia’s long-term default rating from positive to stable. In announcing the decision, the agency cited uncertainty surrounding the country’s political situation ahead of the March 4 presidential election and its continued dependence on oil revenue to balance the federal budget.

Nevertheless, Fitch affirmed Russia’s overall BBB Issuer Default Rating, noting the country’s low debt levels, substantial international currency reserves and slowdown in inflation.

Space A fiery end to a much-heralded probe brings into question the quality of Russia’s space program

What Brought Down Phobos-Grunt The failure of Russia’s first major interplanetary mission in 15 years raises additional questions about the reliability of transportation to the International Space Station.

The failure of Russia’s PhobosGrunt probe, which crashed into the Pacific Ocean, was the disappointing completion of Russia’s first interplanetary mission in 15 years. When viewed in the context of six Russian launch failures in 2011, the doomed unmanned expedition is considered by experts a particular blow to the reputation of the Russian space program, currently the only source of transportation between earth and the International Space Station.

The crashes are not the only indication that Russia’s space program is in trouble. Late last year, a scandal erupted when LiveJournal blogger Lana Sator sneaked into one of the space program’s key factories and took pictures showing outdated equipment.

During a recent meeting with

itar-tass

RIA NOVOSTI The Moscow News

The doomed Phobos-Grunt probe being prepared for its Nov. 11, 2011, launch.

Dmitry Rogozin, a recently appointed deputy prime minister in charge of the industry, Prime Minister Vladimir Putin said that the civilian space program must get army–style quality control. Among other things, military quality control requires a permanent presence of a controlling organization (similar to army purchase officers) at any given factory.

But there is some debate as to whether strict quality control alone will help the industry, which desperately needs a new influx of talented staff and updated manufacturing hardware.

“We are talking not about a crisis, but about the consequences of long-term underfinancing of the industry,” said Alexander Zheleznyakov, a member of the Russian Tsiolkovsky Space Academy. The freeze on space program financing, ordered under President Boris Yeltsin, has played a part in today’s failures but, according to Zhaleznyakov, closer attention must be paid to outdated technologies. Zheleznyakov pointed out that Phobos-Grunt was made using 10-year-old technology and spare parts.

only at rbth.ru

itar-tass

Epiphany: Ancient Religious Tradition Lives On rbth.ru/14215

Tinavie

11 Bands that Surprised the Critics in 2011 rbth.ru/14167

ADVERTIsement

02

ADVERTIsement

Politics & Society

Russia BEYOND THE HEADLINES

section sponsored by rossiyskaya gazeta, russia www.rbth.ru

thus far denied any intention to run for president.

Protestors Take to the Street in Attempt to Change System

The Next Six Years

“I’m not sure people in the West fully understand what the opposition coming to power in Russia will mean,”said Dmitry Babich, a political analyst at RIA Novosti.

“The protestors are united not by a single figure, but by several principles. Namely, they are against illegal immigration, the lack of democratic institutions in Russia and corruption at its current levels.

“This means that, should they come to power, Russia will have some sort of nationalist government espousing democratic values,” Babich said.

But while few doubt that Putin will win the top job in the end, his relationship with the newly elected parliament — and society — is anything from certain.

It remains to be seen how far the

The problem comes down to a lack of strong candidates on Russia’s lopsided political playing field. © ruslan krivobok_ria novosti

Vladimir Zhirinovsky (front), Gennady Zyuganov (second) and Vladimir Putin (right) are the main contenders. continued from PAGE 1

The problem, of course, also comes down to a lack of strong candidates on Russia’s lopsided political playing field. The Communist Party of the Russian Federation (K.P.R.F.) is the most credible opposition, with 180,000 members spread across all of Russia’s 83 regions. Its candidate has consistently taken second place in every Russian presidential election since the fall of the Soviet Union. The K.P.R.F. has successfully attracted some high-profile candidates who are opposed to the ruling regime, but don’t care much about ideology. Businessman Viktor Kondrashov famously defeated United Russia’s candidate in a mayoral race in the Siberian city of Irkutsk on a K.P.R.F. ticket last year, repeating the success of the party’s young candidate in a similar election inVolgograd. But despite some new blood, the K.P.R.F. has failed to modernize. Zyuganov, 67, has headed the party since 1993 and the K.P.R.F. largely relies on the protest vote for its popularity.

Just Russia, a party many experts feel was created by the Kremlin in 2006 precisely to take votes from the Communists, appeals to a left-leaning electorate with promises of a “New Socialism of the 21st Century.” Leader Sergei Mironov, a staunch Putin supporter, also announced his intention to seek the presidency earlier this month.

Another longstanding political heavyweight is Vladimir Zhirin­ ovsky, head of the Liberal-Democratic Party of Russia (L.D.P.R.) since its inception in 1991. While the party has positioned itself as

anti-government with several notorious nationalist slogans (Zhirinovsky famously called for reoccupying Russia’s near abroad and deporting ethnic minorities), it has consistently voted in favor of practically every major government initiative.

“A drop in oil prices could be enough to turn these political leaders into genuine opposition,” Ryabov said. “However you feel about Zyuganov, Zhirinovsky and Mironov — they’re professional politicians, after all. They understand how society feels and know how to react.”

But not everyone is waiting for the parties to modernize. Billionaire Mikhail Prokhorov made

headlines when he announced his plan to run for the country’s top office. For most of the last decade, big money had stayed out of politics, and Prokhorov’s decision to enter the race could be seen as a test case for other wealthy Russians.

“I don’t see a big threat [to the government] coming from Prokhorov just yet,”said Ryabov,“but he could take a risk at the right time and lead a major opposition bloc in parliament.”

Another widely circulated name is lawyer-turned-anticorruption-blogger Alexei Navalny, referred to as “the only electable Russian” by opposition journalist Yulia Latynina. Navalny has

authorities will go in heeding the opposition’s demands. In his last state-of-the-nation address as president, Dmitry Medvedev announced a sweeping political reform that would include the return of direct gubernatorial elections, a significant easing of requirements for registering political parties and the creation of an editorially independent national TV station.

But this hasn’t placated several opposition leaders. Boris Nemtsov, one of the main organizers of the vote protest rallies, referred to Medvedev’s plans as an“acknowledgement of the complete failure of the policy of building a corrupt power vertical” on his LiveJournal blog.“Most of the demands [from the protests] have [still] been ignored,” Nemtsov wrote.“We must fight for all our demands being met.”

Nemtsov’s comments echo those of other opposition leaders, many of who cautiously praise the reforms, but are not eager to wait five and six years for the next round of parliamentary and presidential elections.

2012 Russian Presidential Elections

most read When Monuments Fall: The Politics of Toppling Sculpture http://rbth.ru/14179

Viewpoint

No Revolution for Russia’s Cubicle Dwellers While Masses Still Back Putin Georgy Bovt

Special to RBTH

W

ill Russia erupt in full-fledged revolution during the coming year? Of course no one knows for sure, but trends indicate that this is unlikely.

The protest movement triggered by popular discontent with the results of the parliamentary elections on Dec. 4 produced the two largest demonstrations Moscow has seen in the past 15 years — followed by a lull during the long winter vacation. Objectively speaking, the period of political silence might help defuse the atmosphere. On the other hand, real revolutions that are truly urgent and inevitable do not go on vacation.

There are also some other factors working against the protests, starting with their disorganization and lack of unity. Up to this point, the protests have largely been fueled by what the Kremlin’s chief spin doctor,Vyacheslav Surkov, called “angry townspeople.”These people, the product of the relatively stable era of Vladimir Putin, are not only dissatisfied with the results of the elections, but also the current political system, which they believe does not reflect their political beliefs. Indeed, the key opposition leaders hardly reflect the spectrum of opposition views. Moreover, having gained seats in the Duma and more committee chairs than in the past, these leaders have quickly distanced themselves from the street protest movement.

The street opposition’s task now is to organize and coordinate its actions into a real political movement and form a party that can act on its behalf.

The authorities, agreeing to considerable concessions under the pressure of massive protests, are themselves creating all the necessary legal conditions for the protesters to do just that. Under earlier regulations, for a political party to be established, it needed 50,000 members from most of the country’s regions, but now it is enough to collect just 500 supporters, with 10 in each region. So, establishing a political party has become easy, but given the traditional inability of Russia’s democratic opposition to agree among themselves, we can expect the emergence of dozens of tiny new parties that will compete with each other for opposition votes as happened in the 1990s.

But unlike the 1990s, today’s street protest movement suffers from a lack of obvious leaders.

Billionaire Mikhail Prokhorov does not yet fit the role, and not just because rich people who racked up huge fortunes during the privatization of the 1990s

are traditionally unpopular. So far, Prokhorov has failed to distinguish himself as a strong political leader. His brief experience leading the Right Cause party in the summer of 2011 was marred by many errors typical of inexperienced politicians.

Former finance minister Alexei Kudrin, with his increasing political ambitions, is not really suitable for the role, either. He worked with Prime Minister Vladimir Putin too long, and he does not hide his personal ties with Putin, who responds in kind. Some analysts pin their hopes on popular blogger Alexei Navalny. He gained popularity campaigning against corruption within state-run businesses, but he is little known outside of his Internet audience, and many opposition members are frightened by his nationalistic views.

The opposition’s task now is to organize and coordinate its actions into a real political movement that can act.

Another factor working against the protests is the lack of a common platform. The protesters are all unhappy with Prime Minister Vladimir Putin and Central Election Commission Chief Vladimir Churov, but they differ on what should be done next and how to do it. A new party might develop a strategy, but for this to happen, the protesters have to focus on the tedious work of organizing a political party. And in doing so, they must also be willing to compromise — something Russia’s democratic opposition has never done before.

There are other factors, too. The representatives of Moscow’s relatively well-off cubicle dwellers known here as “office plankton” who took to the streets in December have not been joined by the wider population. And that means that Vladimir Putin in his bid for the presidency can count on the support of those people. With an effective election campaign, Putin is sure to win on March 4 without any vote rigging.

In the short term, there do not seem to be any real threats to Vladimir Putin’s bid for power; it is after the presidential election that the authorities will face real problems, caused not so much by the protests of “angry townspeople” in Moscow and St. Petersburg, but rather by the country’s increasing economic problems and the need to take unpopular steps in order to modernize the economy and the aging infrastructure inherited from the Soviet era.

Georgy Bovt is a Moscow-based political analyst.

Interview AndRei nikitin

Heading Up the “Blackberry” Agency Andrei Nikitin is general director of the Agency of Strategic Initiatives (A.S.I.), a group created last summer by Prime Minister Vladimir Putin to address concerns of business owners and professionals — some of the same people who took to the streets in protest in December.

Nikitin shared his agenda with Anna Nemtsova, Moscow correspondent for Newsweek and The Daily Beast and a contributor to Russia Beyond the Headlines.

NATIONALITY: russian AGE: 31 studied: Economics

© alexandr natruskin_ria novosti

How do you respond to the latest wave of criticism and recurring protests against Prime Minister Vladimir Putin?

As far as I can see, Vladimir Putin is a person who has the support of a majority of Russians.

That is what makes him feel confident about his strength. It gives him a feeling of legitimacy. At the same time, he is a clever man who realizes, as he said himself, that the people who came out to the square are also a product of the Putin regime. It is a generation of free professionals, brought up during Putin’s epoch.

The idea to create our agency was an attempt to establish communication between [Putin] and this part of the public. My agency is a Blackberry that one can

His story

call. Our job is to realize all the positive ideas coming to us, and try to apply them in projects on federal and regional levels.

How is your agency different from dozens of other, already existing state institutes?

We focus on different themes.

One of them is called “new business.” The idea is to support already succeeding companies when they hit a ceiling, or some barrier that keeps them from growing. This month, our agency was assigned to develop our investment projects across Russian regions. We are responsible for im-

Andrei Nikitin was born in 1979 in Moscow. He received undergraduate and Ph.D. degrees in economics from the Russian State University of Management. Nikitin wrote his Ph.D. dissertation on organizational change as an effective management tool. He also holds an M.B.A. from the Stockholm School of Economics. Nikitin worked in several management firms linked to the oil and gas industry before cofounding his own firm, Ruskomposit. In March 2011, Ruskomposit signed an agreement with the Federal Agency for Youth Affairs to support the work of young entrepreneurs. Nikitin was named head of A.S.I. in July 2011.

proving local investment climates.

We are interested in helping the best entrepreneurs with mediumsize businesses, those worth three or four billion rubles, who have revitalized production in the regions. We create opportunities for them, and support them by making changes in the system in order

to limit decisions made by single bureaucrats.

What kind of interaction do you have with Vladimir Putin?

The prime minister would like to meet with businessmen and hear about problems they come across. I meet with Mr. Putin every month and a half to report about on our progress. Being a businessman myself, I could see how to improve the issue concerning state guarantees; I came to this job to make the business climate better. I do not think of myself as of part of the government.

Are you afraid to be direct when you tell the prime minister about the difficult issues people deal with?

There is nothing to be afraid of. There is no use for me to talk about problems — I go with the options, solutions. We discuss optimal solutions; besides new business, we have a department called “new professionals.”

Today, business companies suffer from professional staff hunger. Every year, the Ministry of Education spends about 100 billion rubles on training professionals, while business has to spend about the same amount for retraining the graduates they employ.

What initiatives do you offer to the system of education?

Next year we are planning to launch the Global Education program, similar to what they have in China and Kazakhstan, where students can study at the world’s best universities under guarantees that they would come back.

Before the program begins to work and thousands of students study abroad, we need to break the wall of resistance from the [university] rectors. They believe that everything is fine in our country.

One disagreement we have with the ministry is that they believe that university rectors should be selecting students who go abroad.

We think that the system of applications should be transparent and that any student has a right to study abroad.

What do you think makes business people like you so angry today that they come out to the streets?

The lower-level bureaucrats are violating their rights. We have made some real progress in the regions, where we demanded that governors guarantee their responsibilities to investors. Investors should have access, so bureaucrats react in no more than two days.

ADVERTIsement

ADVERTIsement

most read How Steve Jobs Would Have Built Skolkovo http://rbth.ru/13548

Russia BEYOND THE HEADLINES

section sponsored by rossiyskaya gazeta, russia www.rbth.ru

Special Report

Skolkovo The founders of Russia’s innovation city are already winning the hearts and minds of innovators

Building the Engine of Progress From the Idea Up

I

press photo

special to rbth

In figures

2.7%

of G.D.P. is what American companies spend each year on research and development. Russian companies spend 1 percent of G.D.P.

150

is the number of employees Siemens hopes to have working in its research center at Skolkovo by 2015.

$30

million is the amount the Skolkovo Foundation is contributing to Siemens’ Skolkovo project.

The founders of Skolkovo hope it will become a major player in global research and development. mens and $30 million by Skolkovo Foundation grants.

“For us, [Skolkovo] is interesting as a pilot project that will transform Russia’s future,” said Alexander Averyanov, head of the

Siemens project at Skolkovo.“It’s no coincidence that Siemens C.E.O Peter Löscher is a member of the Skolkovo Foundation Board. We are also cooperating with the foundation to promote the Skolkovo brand around the world, and are dealing with the infrastructure issues.” Siemens has not disclosed details of its project, but some statements indicate that is likely to be related to radioisotope diagnosis.The first grant of more than $4 million has already been issued for the research project.

Nokia, Finland’s mobile phone powerhouse, has a somewhat different vision of its partnership with the foundation, with a focus on inventing and introducing inline production of everyday devices. “[Skolkovo Foundation President Viktor] Vekselberg and I signed an agreement confirming the specific stages of the center’s development,” said Nokia representative Tatiana Oberemova.

“The center will develop powerful mobile computing systems and offer solutions in the field of nanotechnology. Nokia’s investments in the center amount to a double-digit number in the millions of euros, which is the standard budget for Nokia’s R&D centers.”

The Nokia project developed

M.I.T. Professor Headed to Skolkovo The technical university at Skolkovo will be led by an American with an interest in Russia and a long history of commercializing science.

Elena Pokatayeva, Konstantin Poltev, Nikolai Zimin

© ilia pitalev_ria novosti

itogi

Crawley earned his Bachelor of Science degree in Aeronautics and

C.O.O. Skolkovo foundation

An architect’s rendering of the innovation city of Skolkovo. In addition to research facilities, the campus will include housing for scientists.

at a dizzying pace: The construction contract was signed in June and a handset research facility was opened in November. Eventually, the company hopes to not only construct laboratories but also develop large-scale commercialization projects involving mass production of electronic devices using nanotechnology.

“Until the first project is implemented, in the minds of most Russians, it will remain another government idea.”

Nokia competitor Ericsson sees Skolkovo as an excellent platform for research in the sphere of telecommunications, cloud and telematics technologies. Its first research effort will be smart power-supply networks whose main goal is to save energy. These smart meters installed into phones will allow end users to provide up-to-the-minute information to distribution companies, allowing both the company and the consumer to monitor consumption patterns more closely. Ericsson Vice President for Work with Government Agencies Mikhail Podoprygalov said: “There used to be a lot of talk about the need to develop our economy, noncom-

modity exports — and now we have a place, an ecosystem where this can be accomplished. Skolkovo provides an ecosystem, and that’s an important cornerstone,” said Podoprygalov.“Some things could have been done better and differently, but given the ambitious task Skolkovo is tackling and its vast range of goals, it is hard to say what’s justified and what isn’t.”

Timofei Shatskikh, a financial analyst with RosBusinessConsulting, said that showing that Skolkovo is not just talk, but action is crucial to its success:“This is really Skolkovo’s main problem. Until the first project is implemented, in the minds of most Russians, not to mention domestic investors, it will remain just another ambitious government idea. People don’t see Skolkovo as a scientific institution, but rather as a political one aimed at projecting a positive image.

Even the foundation’s established partnerships with Western companies cannot dissuade them of this. Until the first scientific idea that germinated within the walls of Skolkovo is presented, that opinion won’t change. But the creation of several R&D centers may rectify the situation. Then you can at least argue that the generation of new ideas will happen serially.”

Academics For the first president of its new scientific institute, the Skolkovo Foundation looked abroad

The Insider

Skolkovo All About Changing Culture ’m often asked to summarize the core mission of Skolkovo.

This requires only two words: changing culture.

Skolkovo is changing the academic culture in Russia by building an entirely new graduate-level science institution.

We believe it will be the first such institute in the world that comprehensively integrates education, research, innovation and entrepreneurship.You may not choose to start your own company upon graduation, but you will know how to.

Skolkovo is changing Russian corporate culture.We’re educating large Russian corporations on the value of conducting contract research at this new institute, how to interface and partner with the venture capital community, and in general how to embrace innovation as central to their success.

Skolkovo is changing entrepreneurial culture. It’s easy to forget that not long ago, private enterprise in Russia was either illegal or strongly discouraged.

It will take time to overcome this legacy and to let the Rus-

Alexander Vostrov

The Skolkovo Institute of Science and Technology (SkTech) recently announced that its first president will be M.I.T. professor Edward Crawley. In making the announcement,ViktorVekselberg, president of the Skolkovo Foundation, said that the 56-year-old American scientist was the “No. 1 candidate.”Crawley was selected for his knowledge of Russian, connections to the Russian scientific world and his talent as a manager. According to colleagues, Crawley is one of the pioneers of commercializing science.

Crawley promised to turn SkTech into a Western-style university, combining theoretical and applied research with the commercialization of scientific achievements.

VIEWPOINT

Steven Geiger

The innovation city being built in Skolkovo is still a work in progress, but the place is already making its mark on Russia’s consciousness.

The founders of the Skolkovo city of innovation hope it will become not only the engine of the Russian economy, but a major player in global research and development as well. They have their work cut out for them: At the moment, Skolkovo exists more as a concept than as a reality. But nevertheless, the place is making its mark in Russia’s consciousness.

Skolkovo as a brand is already widely known, and more words with the prefix “nano” are popping up in everyday language, along with “innovation” and “modernization.” Skolkovo has also revived an older Russian acronym: Niokr, basically the Russian equivalent of R&D. It refers to a full-cycle research center where scientists come up with new technology, build a pilot product, test it and, if the test is successful, launch it into mass production. In the United States, $382.6 billion or 2.7 percent of G.D.P. is spent each year on research and development. In contrast, Russian firms spend just a little over $23 billion, or 1 percent of G.D.P. Skolkovo wants to change that.

“Our main task now is to create the most comfortable conditions and environment,” said Roman Romanovsky, Skolkovo’s operating director for key partners.“Innovation centers are usually thought to be exclusively aimed at start-ups, but that’s not the case. Nor are we committed only to corporate research. We seek to make the circulation of ideas at Skolkovo constant, so that everyone can find what they came here for. Major companies would get young talent, start-ups would meet investors and investors would get promising new ideas, and so on.”

The approach has proven to be popular with foreign companies, many of which have already expressed a desire to open research centers at Skolkovo. Most companies have just given verbal assurances of participation, but some concrete agreements have already been signed.

German electronics giant Siemens has signed a document providing for the phased development of its operations in Skolkovo. By 2015, it hopes to have a staff of 150 at the center.

The total sum of joint investments will be about $80 million, with $50 million to be put up by Sie-

03

M.I.T. professor Edward Crawley (left) and Viktor Vekselberg, president of the Skolkovo Foundation.

His Story NAtiONALITY: American AGE: 56 studied: Aeronautics

Edward Crawley began his career in science as a student at M.I.T. and has rarely left its confines. Although at one time he had hoped to become an astronaut, the rigors of scientific study held more appeal for

the aerospace expert. Although well respected as an academic, Crawley is also an effective manager and innovator, creating a new program at M.I.T. to help engineering students learn about management and launching companies to monetize his inventions.

Crawley is fluent in Russian and has been a guest lecturer at the Moscow Aviation Institute.

Astronautics from M.I.T. in 1976.

According to the people who knew him then, he had no trouble deciding to specialize in man’s relationship to space. The young scientist dreamed not only of traveling to the stars himself, but also of engineering support for space travel. He received his master’s degree in the same field in 1978 and his Sc.D. in aerospace structures in 1980.

Interaction with Russian scientists in the field of space exploration has played a major role in Crawley’s career. In 1989, he was part of a delegation of aerospace technology specialists that visited the Moscow Aviation Institute (M.A.I.). In September of 2010, Crawley gave a report on innovations and reforms to engineering education at M.A.I., after which the university’s scientific council decided to award him an honorary Ph.D. In the earliest stages of his career, he established a close relationship with NASA, even reaching the final selection stage of the astronaut corps in 1989. But it was too difficult to combine his scientific work with the rigid system of astronaut training. His flights were limited to amateur piloting and gliding. As a member of the U.S. Human Space Flight Plans Committee, however, Crawley enthusiastically considered plans for an expedition to Mars several years ago.

An Innovator

Over the years, Crawley has cofounded multiple businesses. He

founded the company BioScale to work towards developing biomolecular detectors. He also took part in creating oil exploration system designs proposed

by BP. Crawley’s international academic endeavors are no less impressive. His first notable project was co-directing the International Space University, based in Strasbourg, France. In addition, Crawley organized a series of lectures by M.A.I. professors at M.I.T. “Despite an ability to win people over and his positive attitude, Crawley has always focused not on idle talk, but on solving specific problems so that some kind of benefit results from communication,” said M.A.I. Aerospace Department Dean Oleg Alifanov.

“In particular, Crawley devised the practice of design work for first -year students, who are generally lukewarm to strict disciplines like mathematics, physics and chemistry.

“At the beginning they are involved in a game project [creating designs or devices],”Alifanov said, “and there the student begins to understand why they need knowledge of sciences.”

Crawley’s managerial talent are what attracted Russia’s interest in his candidacy. For him personally, the decision to head the technical university at Skolkovo is apparently motivated by the opportunity to build a major project from scratch, which will require different skills than his work at venerable M.I.T.

In a break with Russian tradition, Skolkovo is an entirely open platform for global cooperation in R&D. sian creative spirit flourish.

Skolkovo is an accelerator in this transformation. By providing support, financing and preferences to start-ups, we hope to level the playing field against stronger incumbents. Our role is also to provide moral support to young entrepreneurs wanting to chase their dreams.

Finally, Skolkovo is aiming to change the cultural understanding of wealth creation. Russia is a country long dominated by physical production. An exclusive focus on material output dominated the Soviet era. Even today, virtually all top Russian businesspeople made their fortunes through physical resources. Unsurprisingly, most Russians view wealth creation in physical terms.

But for Russia to compete in the global knowledge economy, it needs to shift gears — and Skolkovo is the new transmission. We do this by educating about intellectual property; by assisting entrepreneurs and start-ups to create, defend and commercialize their intellectual property; and by creating entirely new intellectual property legal frameworks that can be applied across Russia.

In short, our task is to create efficient mechanisms to turn Russia’s scientific and intellectual horsepower into competitive knowledge-based products and services.

Is changing any culture and mentality easy? They are probably the hardest things to change. The upside, however, is that if you are successful, your

Our task is to turn Russia’s intellectual horsepower into knowledge-based products and services. impact will be significant. In the global race towards a know­ ledge economy, Russia is already well positioned. It can learn from the experience of others.

Russia is starting later in this race, but that gives it an advantage. We at Skolkovo have studied innovation successes and failures alike, and built the learning into our model. In a break with Russian tradition, Skolkovo is an entirely open platform for global cooperation in R&D. Closed science cities of the past served their purpose, but the sheer speed and scale of global interconnectivity dictate openness. The world may not be flat, but it’s definitely becoming more elongated.

Steven Geiger is the C.O.O. of the Skolkovo Foundation, the Russian government’s program for innovation and technology.

ADVERTIsement

04

ADVERTIsement

Business

Russia BEYOND THE HEADLINES

most read Ten Top Mobile Apps and Games from Russia http://rbth.ru/13785

section sponsored by rossiyskaya gazeta, russia www.rbth.ru

ECONOMY in brief

Gaming The world is using mobile apps created by Russian designers, but the domestic market remains small

Making Mobile App Success Look Like Child’s Play

Bureaucrats Forced to Disclose Income, Assets Deputy Prime Minister Igor Sechin has laid out in a letter how state company managers will disclose their assets, following up on Prime MinisterVladimir Putin’s demand that 21 state companies and banks disclose the income of their top employees. According to the letter, the managers and their families will have to disclose not only income, but also their shareholdings and companies of which they are beneficiaries. Sechin’s letter said there would be no exceptions to the disclosure requirements.

President Dmitry’s Medvedev’s economic adviser Arkady Dvorkovich said this was a logical continuation of the campaign against corruption.

From Cut the Rope to Pocket Blonde, apps built by Russian developers are making serious money in the global mobile market.

Adrien Henni

East-West Digital News

alamy/legion media

Mall Sold in Giant Real Estate Deal Millions of users are playing games developed by Russian companies every day.

Russia’s Top 5 mobile and gaming apps are available on multiple platforms

press photo (4)

Watch out Angry Birds and Fruit Ninja: Russian companies in the booming mobile and games app markets are conquering the world with imaginative creations like Cut the Rope and MewSim. The emerging players include traditional mobile content companies such as Dynamic Pixels, HeroCraft, Game Insight and i-Free, which originally focused on social games. With Game Insight’s new Crime Story, each gamer can become a crime boss, building a criminal empire by eliminating rivals and expanding the business.

Founded in Moscow in 2005 as a mobile development studio, G5 Entertainment is now a global company developing mobile and PC games on a massive scale — one release a week, according to the company's Web site — with such international successes as Stand O’Food,Virtual City Playground and Supermarket Mania 2. The company is listed on the AktieTorget equity marketplace in Stockholm and has operations there as well as in Moscow and San Francisco.

But much smaller developers are also enjoying success. Tens of millions of mobile gamers across the globe are downloading Cut the Rope. Developed by Moscow-based Zeptolab, the game features a little monster fed with candy. Maxim Petrov, another Moscow programmer, has built a flourishing business with Power AMP, praised as one of the best media players on the Android market.

“The Russian mobile content industry has been developing for almost a decade,” said Leonid Kovalev, marketing director of DaSuppa Studios, a Moscowbased mobile games company.

“But in recent years, new-generation apps have created a new situation. Through global stores such as the Apple App Store or the Android Market, Russian developers can easily sell everywhere in the world. Their vision has become global.”

Despite the global success of Russian games, the domestic market is still quite small. Smartphone sales in the country are taking off — more than doubling from 2010 to 2011 — but the number of smartphone owners is still a fraction of what it is in Western Europe and the United States, according to a TNS survey. About 1.5 million Russians use the iPhone, and about 5 million have Android-supported smartphones, according to recent estimates from i-Free.

free

$0.99

free

free

title: Altergeo

title: Cut the Rope

title: Paradise Island

title: Pocket Blonde

Platforms: ios, Android

Platforms: ios, Android

Platforms: Android, iOS

Platforms: Android

Developer: Altergeo

Developer: zeptolab

Developer: Game Insight

Developer: i-Free

AlterGeo is a location-based social networking service for mobile devices. The app allows users to discover new cafés, shops and other places of interest and share their opinions of them with friends. Users can benefit from discounts and be rewarded with points when “checking in” to a venue. Launched in 2008 — before its U.S. competitor Foursquare reached the Russian market in September 2011 – AlterGeo now claims 800,000 registered users. Only a fraction, however, are considered active.

Cut the Rope is arguably the most successful Russian mobile game.

Players swipe a finger across the screen to cut ropes that hold candy to feed the monster, Om Nom. In the first 10 days after going on sale at the Apple App Store in October 2010, Cut the Rope was downloaded a million times. It topped the paid applications section of the Android Market a week after its launch on July 1, 2011, and won an Apple Design Award for the iPhone platform at the 2011 Apple Worldwide Developers Conference.

A high-definition role simulation game in which players turn sun, sea and beaches into a flourishing resort business. Gamers entertain rich tourists in casinos and entertainment centers; build hotels, restaurants and discos; and learn to manage the business. Launched in December 2010, the game has ranked highly on the Android Market’s Top-Grossing Apps list since May 2011, generating up to $1 million every month for its publisher Game Insight. In September, the game reached five million players.

This app introduces you to a girl who lives in your phone and talks to you. She wakes you in the morning, chats about recent news, makes jokes, sends out birthday reminders, delivers a morning horoscope, keeps an eye on the weather and more. Blondie also has a memory: if you change your phone, she will remember you, so you won’t have to get acquainted again. Pocket Blonde was developed by the St. Petersburg-based i-Free, as part of Brainy, a series of smart mobile aide applications.

Money problems

Although traditional mobile content — from ringtones to Java games — still generates hundreds of millions of dollars in Russia, the market is expected to decline and a number of developers are switching to new-generation content.

I-Free still generates $60 million in revenue from traditional content in Russia and abroad, but last year it created an entire division dedicated to new apps and games. Petrov estimates that newgeneration mobile applications

and games generate revenues in the tens of millions for Russian developers. I-Free’s most significant international success to date has been Pocket Blonde. The application features a “virtual personal assistant,” and has been downloaded more than a million times from the Android Market since its release in March 2011.

Other companies, such as DaSuppa, have stopped producing traditional games and are putting all of their resources into new-generation products.

Outsourcing is another promising option companies are exploring. Established offshore developers such as Epam and DataArt have opened dedicated departments, while dozens of smaller businesses or teams are experimenting in this new market.“These companies and teams can barely meet the demand,” Petrov said.“Some Russian companies have already found additional teams or subcontractors in Belarus, Ukraine or the Baltic states.”

Part of the reason domestic smartphone users have been slow to download apps is because paying for such services is more difficult in Russia than in other parts of the world.

“Most Russian users are ready to pay for good mobile products,” said i-Free co-founder Kirill Petrov.“But Apple’s app store and Google’s Android Market accept payments almost exclusively through bank cards, which Russians are reluctant to use.”

Morgan Stanley’s Real Estate Fund VII has agreed to buy St. Petersburg’s flagship mall, Galereya, from Kazakh-run Meridian Capital for $1.1 billion in Russia’s largest-ever real estate deal.The Petersburg mall is Russia’s second biggest, after the AFI Mall in Moscow. Galereya opened in November 2010 and features 290 stores, a 10-screen movie theater, and a 27-lane bowling alley. The deal is expected to close by the end of January, according to sources quoted by business daily Vedomosti.

Renault-Nissan to Control AvtoVAZ Carlos Ghosn, Chairman and C.E.O. of the Renault-Nissan Alliance said that an agreement on the alliance taking a controlling stake of Russian car giant AvtoVAZ is “very likely” to be signed in the first quarter of 2012, according to AFP. RenaultNissan currently holds 25 percent of the company. In December, AvtoVAZ president Igor Komarov said Renault-Nissan might take a controlling stake in March. AvtoVAZ share prices surged by more than 12 percent on the statement.

GLOBAL RUSSIA BUSINESS CALENDAR 5th Annual Russia & Eurasia Trade & Export Finance Conference Feb. 7, 2012 Marriott Moscow Royal Aurora Moscow, russia

Start-ups Russian tech entrepreneurs have a new place to look for advice and funding with a new local incubator

Russia’s first local mentor-driven tech start-up incubator is now accepting bids for projects, but it faces competition from established foreign incubators. adrien henni

East-West Digital News

The Russian start-up scene took another step towards becoming an international platform with the launch of TexDrive, Moscow’s first international mentor-led start-up accelerator program. The 12-week TexDrive accelerator program for entrepreneurs aims to“build businesses that are efficient, attractive and have global ambitions” with the help of Russian and foreign experts and mentors.

Project teams selected by TexDrive are exposed to a range of assistance intended to match their focuses.

“For instance, projects will receive a free session to review their

intellectual property strategy with specialists from Stratagem. Investment bankers will advise on raising capital internationally. Eltoma Corporate Services will help companies with incorporating and international tax planning, while Fabernovel will advise on international business development,” said one of the project’s co-founders, Alexander Zhurba.

TexDrive also provides projects with financial support — starting with a cash injection of $25,000 — in exchange for a“reasonable stake.” The most promising start-ups will receive a second investment of $100,000 or more before being presented to angel investors, venture funds and industry players from Russia and abroad.

Start-up shares for gurus

The list of mentors includes founders and general managers

photoxpress

Hatching the Best of Russian Tech

Tech entrepreneurs who need advice can look to start-up accelerators.

of top Russian tech companies — from Abbyy and Qiwi to Softkey and Adobe Russia — not to mention prominent local and foreign fund managers and industry experts. Co-founder Andrei Kessel admitted these gurus could not devote a large amount of their

time to TexDrive start-ups, but said, “Their involvement will be stronger and more efficient when they are granted shares.”

TexDrive received its first applications from start-ups through its Web site in November. Some other projects have been brought

in by mentors or have come via the team’s network. The accelerator’s scope is large, and includes “all technology-based projects with strong teams at any stage of maturity from Russia or the C.I.S.,” said Zhurba, who added that he does not expect any difficulties with sourcing.

Although TexDrive undoubtedly has a unique form and focus, it is not the only smart collective attempting to herd Russian startups over the initial hurdles into international markets. Earlier this year, leading U.S. venture funds Tomorrow Ventures and Garage Technology announced partnerships with Digital October, a Moscow incubator that will help them source projects from Russia. And in mid-October, SiliconValley incubator Plug and Play Tech Center got operations underway in Russia with the selection of its first five start-ups.

A variety of talks on essential topics will be held by leading pioneers and practitioners of trade and export finance. The talks will cover the opportunities, demands and complexities of financing the essential trade that is crucial for regional prosperity. › http://www.exportagroup.com/

9th annual Krasnoyarsk Economic Forum feb. 16–18, 2012 Krasnoyarsk, Russia

The theme of this year’s forum is “Time for Strategic Initiatives.”

The experts will discuss the issues related to the development of Russia in the next electoral and investment cycle, focusing on the strategic initiatives that Russia needs. The forum will start with the opening of a thematic exhibition, “Investment, Innovation, Infrastructure: the Future of Siberia.”

Included in the three-day event is a youth forum for young managers from all over the country. ›› http://en.krasnoforum.ru/

Find more in the Global Calendar

at http://rbth.ru

Investment Banking: Where the Big Bucks Go February 8

ADVERTIsement

ADVERTIsement

most read Economic Forecasts for 2012: Bad Start - Good End? http://rbth.ru/14174

Russia BEYOND THE HEADLINES

section sponsored by rossiyskaya gazeta, russia www.rbth.ru

Money & Markets

MOSCOW BLOG

International A legendary businesswoman discusses two decades of success way, by hand,” said Cloherty, sitting in a swanky café in the foyer of her office, a stone’s throw from the newly renovated Bolshoi Theatre. “Babushki were testing the finished boards by hitting them with a hammer and listening to see if there were any holes in the boards. The whole place stank.”

Rather than being put off, Cloherty said,“The whole experience only energized me.

“After the trip to Moscow, the State Department rang again and said things weren’t gelling, and

Saint Spring (“Svyatoy Istochnik”) is a successful brand of bottled water.

ben aris

business new europe

Patricia Cloherty, managing partner of Delta Equity Partners, bubbles with enthusiasm discussing the relationship between successful entrepreneurs and people who have both excelled at sports and the hard sciences. Her love for sports was obvious from her shirt, a “Silver Sharks” ice hockey jersey — the sharks are the local youth hockey team she sponsors.

Her interest in hard science stems from her early days in financial management, when she began investing in health care.

It was in the health-care sector that she made her name in the United States, long before she became the doyenne of Russian capital markets. Most famously, she backed the Scottish project to clone sheep that produced a particular special protein far more cheaply than synthesis – mainly because it made good business sense, but also because her sister was suffering from a disease that the protein cures. The project worked, although unfortunately not in time to save Cloherty’s sister.

But her enthusiasm for medical research remained, and she went on to invest in the project that eventually produced the cocktail of drugs used today to fight H.I.V.AIDS. Speaking about medical research, Cloherty said, “It won’t work in Russia, as there are still no enforceable intellectual property laws that protect the heavy capital investment you need in this kind of work.”

Cloherty should know what works in Russia. She has been investing in the country since 1994, when U.S. President Bill Clinton asked her to come along on a trip to visit Boris Yeltsin.

“I was sitting in my offices on 57th and Park Avenue in NewYork when I got a call from the White House,”said Cloherty.“‘We need a “deliverable”on the fund issue for Clinton’s trip to Russia,’ they told me, and asked if I would go over with Clinton and head up the fund.”

She was the president of the U.S. Venture Capital Association at the time, and her reputation clearly preceeded her. Cloherty set up her first private equity fund, Apex Partners, in 1969. It started life with $2 million under management and had more than $10 billion under management by the time she left.

As soon as she landed in Moscow, in true fund manager style, Cloherty hired a helicopter and few off to visit a couple of factories to see what life on the ground was really like. Her first stop was Sun Brewery, run by an Indian, Shiv Khemka, and one of Russia’s first really successful foreign investments. Then she went on to a chipboard plant on the Finnish border.

“They made fiberboard the old

would I go back,”Cloherty said.“I left the next day. I didn’t want to give myself the time to change my mind.”

Clinton appointed her the head of the Russian Investment Fund, and by 2004 Cloherty had set up Delta Private Equity Partners, a U.S.-backed private equity firm dedicated to developing and funding fast-growing companies in Russia. Since it was founded, Delta has invested more than $550 million in 55 Russian companies through two funds: the U.S. Russia Investment Fund, established in 1994, and Delta Russia Fund, a successor private fund formed in 2004. Now, however, the fund is winding down and has sold all but four of its investments, earning an impressive 27 percent return on equity in the process and scoring some major firsts along the way.

Probably Cloherty’s most lasting legacy was the creation of Delta Capital, Russia’s first dedicated mortgage bank, which she sold to GE Capital in 2004 at four times book value. The mortgage indus-

her story

Patricia M. Cloherty

from personal archives

Patricia Cloherty set up her first private equity fund in 1969.

Today, she is one of the most influential women in the venture capital world.

kommersant

Making Money

By Keeping Her Options Open

“You have to remember everyone in Russia was someone else a decade earlier,” said Patricia Cloherty.

NAtIONALITY: american AGE: 71 studied: Foreign Affairs

Cloherty began her career in venture capital in 1969 at Apax Partners, Inc. She later became president, co-chair and general partner of the firm. In 1995, President Bill Clinton appointed her to the board of the U.S.-Russia Investment Fund.

In 1998, she assumed the role of chairman, and in 2003 she became chairman and C.E.O. of the fund’s general partner, Delta Private Equity. She was twice named one of the world’s most influential investors by Forbes magazine.

Cloherty holds a Bachelor’s degree from the San Francisco College for Women and two Master’s degrees from Columbia University.

try in Russia is still in its infancy, but the number of new contracts being issued has been doubling every 18 months or so, and the government says the total number will triple in five years as the business finally starts to take off.

“The thing that really struck me about the mortgage business is that Russians are honorable borrowers”Cloherty said.“If they take a loan, they bend heaven and earth to repay it. Owning their own place is important to Russians, and they don’t want to lose it by defaulting on their loans.”

Another of her legacies was to train a whole generation of young Russian financial professionals.

“The first thing I did on taking over Delta was sack all the expats,”said Cloherty.“They were either bent or incompetent.We hired [in their place] Russians, Ukrainians, Belarussians and Georgians.”

Kirill Dmitriev, who was appointed this summer by Prime MinisterVladimir Putin to run the Kremlin’s $10 billion Russia Direct Investment Fund, is probably the most famous alumnus of the Cloherty school of asset management.

Cloherty has also been a pioneer in several other sectors, investing in Russia’s first successful supermarket chain, a bottled water company and a packaging company, to name a few. But not all the deals went smoothly. One of Cloherty’s very first investments was in a diesel engine plant, but the fund’s money almost immediately disappeared.

“I tracked the money to a suitcase that was delivered to Vienna, but lost the trail there,” Cloherty said. “We found the partner but not the money.”

And the Russians have lauded Cloherty. Until recently, she sat on the Russian foreign investment council and the board of Skolkovo. And she is deeply enmeshed in the rhythms of Moscow life. Currently she shares her apartment with a 17-year old dancer who is one of the few Americans studying at the Bolshoi.

“It’s a little bizarre, as I keep having all these young Russian and French ballerinas ringing up in the middle of the night,”Cloherty said, laughing, still a dynamo of energy at 70. She remains committed to Russia and believes that it is right at the start of the transformation process.

“You have to remember, everyone in Russia was someone else a decade earlier,”Cloherty said.“People learned how to do business from watching movies like ‘Wall Street.’ That is why recreating things that already exist elsewhere can be so difficult. But then look at the growth rates, and that in itself is a testament to the Russian ability to learn.”

Credit cards Russian state banks are increasing their consumer credit business, expanding into underserved regions

Taking Credit for Impressive Growth Bankers in the U.S. and Europe face ongoing protests against growing credit card rates and bank fees while Russian banks look to expand their offerings.

Vladimir Ruvinsky

Russia beyond the headlines

Ivan Svitek, chairman of the board of Home Credit Bank, recently complained that only 24 percent of Russians take out loans and only 18 percent have deposits with banks, while most Europeans use two to four financial products, and some, five to six.

Svitek believes Russia’s retail banks have a lot of potential, but need to expand into more regions and embrace new technologies.

There is reason for his optimism. According to the World Bank, Russia has only a quarter of the global average number of bank branches. Additionally, I.M.F. research shows that the debt of individuals to credit institutions in Russia amounts to only 9 percent of G.D.P. In comparison, in the United States, the ratio of personal debt to G.D.P. is 85 percent. Furthermore, 44 percent of Russians live in parts of the country where there are no retail banks.

According to the National Agency for Financial Studies, 74 percent of Russians use bank cards, but 92 percent of all cards issued are salary cards — issued by a bank at the insistence of a company for employees to access salary deposits. The agency reports that as of Sept. 1, individuals’ credit card debt to banks

sian market for credit cards; the bank has issued more than 32 million of them, and according to the Frank Research Group, its current share of the market is 18.5 percent.

The 2008 crisis resulted in mass non-payment on credit cards, and the banks changed their tactics.

They wrote off small debts ranging from 10,000-40,000 rubles ($325-$1,300) if there was little chance of collecting them; however, amid the deficit of available funds and reduced number of new cards being issued, banks turned to harsh collection techniques.

Unrecoverable debts were sold to debt collectors, who sometimes applied illegal methods to collect them.

After a series of banking regulations came into force in 2008, banks began using more discretion in choosing borrowers. They now ask recently formed credit-

had reached 350.2 billion rubles ($11.3 billion). At that time, there were 11 million credit cards in circulation in Russia, a country of 140 million people.

The market for retail loans and credit cards in Russia began to explode in the mid-2000s, when incomes began to grow. The business peaked in 2008, just before the crisis. The banks most active in this sector were private commercial banks and Russian subsidiaries of international banks.

A popular tactic was the one em-

ployed by Russky Standart Bank, which sent credit cards through the mail without even receiving applications from consumers. A consumer could simply open his mailbox, tear open the envelope, activate the card and use it. The bank would charge up to 250 percent annually, including undisclosed commissions, and many borrowers learned this only when the time came to pay. This aggressive, if controversial, policy secured Russky Standart Bank the leading position in the Rus-

Number of credit cards per person

Russian credit card expansion

05

history organizations to assess borrowers’ solvency. And market conditions have changed, with state banks increasing their credit card businesses. According to Frank Research Group, two of Russia’s major state banks, Sberbank and VTB, have the second and third positions in the market, with a 13.3 percent and 10.1 percent share, respectively.

State banks have access to cheap money and can afford to offer loan rates below the market average. Sberbank offers a minimum annual rate of 17 percent for ruble-denominated loans and rates five to six points below that for cash loans. Although many experts regard the involvement of state banks as having a negative impact on market development, private banks have actually reported an increase in the number of credit cards they have issued. Credit cards now account for more than 13 percent of Home Credit Bank’s portfolio, while Russky Standart Bank, with 52 percent of its loan portfolio made up of credit cards, expects its net profit to reach 5.3 billion rubles ($171 million) in 2011.

Currently, most banks provide credit cards free of charge, although some still charge between $60-$100 to issue a card. Interest rates are higher than those on regular loans, but cards can be obtained within 15 minutes. Cardholders have to pay not only interest but also card service fees, which, as a rule, amount to a minimum of $20 per year. Some banks do not charge anything for the first year, but all banks charge a commission (from 2.5 percent of the loan, or a minimum of 200 rubles ($8)) for withdrawing cash from an A.T.M. Although the anxiety caused by the debt crisis in the eurozone prevents bankers from being optimistic about the future, the impressive growth of consumer lending is hardly at risk.

As the West Sinks Into Despair, Russia Rises Ben Aris

The moscow times

T

he traditional way of measuring pain in times of crisis is to look at the misery index (inflation plus unemployment). And misery has been rising fast in the West. But to really capture the pain people are feeling, look at the despair index (inflation plus unemployment plus poverty): The shocker is that despair in the West is now higher than in Russia.

In October, the U.S. Census Bureau announced that one in seven Americans is now living in poverty — the highest num-

What does it matter if the cost of an iPod rises by 10 percent a year if you can’t even put food on the table? ber since record keeping began 53 years ago. Two weeks later, the U.K. announced that the number of people out of work has hit its highest level in 17 years, and youth unemployment has hit a historic high at well over 20 percent, according to the Office for National Statistics.

Spain capped off the round of bad news with an announcement that unemployment is currently 23 percent — its highest level ever and the highest in the E.U. Even with the West’s low inflation, the misery index is already very high.

But the misery index doesn’t really capture the people’s pain, at least not any more. What does it matter if the cost of an iPod rises by 10 percent a year if you can’t even put food on the table or heat your home?

The despair index better captures the pain, and allows a direct comparison between the West and emerging markets.The surprise is most of the states in Central and Eastern Europe doing much better than the developed economies of the West.

And thanks to record low poverty and unemployment numbers in November, Russia’s despair index number of 25.5 is now lower than that of the United States, which has a despair level of 28.1.

Russia’s number highlights the total transformation the country has undergone since the collapse of the Soviet Union in 1991. Life for Russians at the start of the 1990s was truly horrible. Both Russia’s misery and despair indices were off the charts, into the thousands, thanks to hyperinflation. But as the decade wore on, despair fell steadily. The despair index has fallen from around 90 in 2000 to the current level of 25. It is easy to blame the rising despair on the current crisis, but the U.S. Census reports that poverty levels in the U.S. actually have been rising since well before the current crisis. Economists say that most American families were worse off in 2000 than they were in 1990.

If you are rich, you are better off in the U.S., but if you are poor, your chances look brighter in Russia.

There are some problems with comparing poverty across countries. With a poverty line of $11,139, America’s poor are a lot better off than most Russians, who earn an average of $9,600, but the U.S. Census Bureau says half of those living in poverty live in “deep poverty” with incomes half of the official poverty rate, which would make them poor even by Russian standards. The existence of poverty in the “rich” world only underscores the fact that Western democracy is flawed, and emphasizes the increasingly desperate need for deep structural reform.

There has been a lot of talk of emerging markets overtaking the West, but for normal people, the BRICS have already caught up. If you are rich, then you are better off living in America, but if you are poor, then the chances of your life improving are now brighter in Russia.

ADVERTIsement

06

ADVERTIsement

Opinion

Russia BEYOND THE HEADLINES

section sponsored by rossiyskaya gazeta, russia www.rbth.ru

U.S.-Russia Relations Must Expand Beyond Politics http://rbth.ru/14142

The prism of stereotypes Boris Tumanov

A

Gazeta.ru

s expected, last December’s protests caused yet another sporadic outburst of attempts by the foreign press to comprehend what’s happening in Russia. For several days, I was interrogated by virtually all the Francophone media, which, to my growing surprise, paid attention mostly to secondary issues without even trying to get to the heart of the unprecedented manifestation of civil activity in Russian society.

This tendency became especially conspicuous after the Dec. 24 rally, when all the media outlets contacting me asked only about Alexei Navalny as a political figure and the consequences of Mikhail Gorbachev’s suggestion that Putin step down.

I tried to explain to them that Russia, most of whose population continues to worship Putin, does not need calls to storm the Kremlin, even though they are told it is occupied by“crooks and thieves.”Rather, the country needs to put in a lot of patient, thorough and conscientious work to create an opposition that doesn’t just shout slogans, but has a distinct platform. I also told them that with all my infinite respect for Mikhail Gorbachev, I believe that his appeal to Putin is just hot air meant for discussion.

I also drew the attention of my foreign counterparts to the case of former Finance Minister Alexei Kudrin and his action plan, which proposes the evolutionary development of civil society in Russia. At the same time, I stressed that neither Navalny nor Kudrin was the leader of the opposition, but rather examples of the processes emerging in Russian society today. But my attempts invariably encountered the cranky impatience of my interviewers, who insisted on sticking to the topic of their choice without embarking on a more detailed analysis of the situation. Moreover, when I tried to explain the es-

The West’s inadequate perception of Russia is caused by intellectual laziness rather than some malevolent bias. sence of my position in more detail after the interviews, my foreign colleagues disregarded my remarks, apparently thinking it superfluous discussion of phenomena that they believed had no external effect.

This belligerent lack of inquisitiveness has recently brought many authoritative global media to the point where their anecdotal conclusions are further aggravated by their inability to consider any other scenarios.

Take the example of Business

Week magazine: This highly respectable U.S. weekly decided that former chess champion Garry Kasparov could become the sole leader of the Russian opposition.

“Kasparov is the only one in the movement who commands global recognition,” the magazine wrote by way of explanation. The Chicago Tribune all of a sudden ascribed to Vladimir Putin a profound knowledge of Sun Tzu’s “Art of War,” which the newspaper believes was evidenced by the fact that Russia’s“national leader” is “leveraging his opponents’ inherent disorganization against them,”just as the Chinese thinker taught — as if Putin, looking at the neverending and senseless quarrels among his critics, wouldn’t have thought of this without Sun Tzu. This willful ignorance is char-

acteristic of not only the global media, but also all political offices, without exception. The unwillingness to delve into the nuances of various national realities inevitably discredits both the West in Libya and Russia in South Ossetia.

As for the West’s inadequate perception of Russia in particular, at the risk of inviting the criticism of those who advocate the theory of the“eternal global conspiracy”against our country, I believe that this perception is caused by elementary intellectual laziness rather than some malevolent bias. In fact, Russia is to a great extent responsible for this.

During the 70-year-long Sovietimposed isolation, the outside world had no chance to get to know Russian reality and was instead fed the specific social pro-

cesses devised in the ideology office of the Communist Party’s Central Committee.

Despite the current openness of Russian society, the West still sees the country through a prism of clichés — positive, negative and neutral, but clichés nonetheless — without ever trying to move away from the familiar set of memorized ideas: sturgeon caviar, Dostoyevsky, the balalaika, the mysterious Russian soul, vodka, dissidents, the demonic K.G.B., oligarchs, matryoshka dolls and revolutionary sailors.

This intellectual lethargy, colored by a carefully concealed superiority complex, already prevented the West from identifying the real reason behind the fall of the Soviet Union, resulting in its absolutely irrelevant disappointment with the events that followed.

These pragmatic observers are making the same mistake again, trying to convince themselves that globalization processes will sooner or later bring humankind to some universal democratic common denominator.

You must be living in Neverland if you truly believe that Garry Kasparov enjoys global recognition as the leader of the Russian opposition, therefore completely ignoring the fact that most Russians do not care about the recognition of their politicians in international circles.

If the West really wants to see the emergence of a civilized Russia in the foreseeable future, they should painstakingly and responsibly broaden their knowledge of Russian society, abandoning their clichéd pictures and the whimpers of our liberals.

They simply have to stop being lazy and start scrutinizing Russia’s social processes, which are growing increasingly complex.

The most important thing is for them to understand that for obvious reasons, what is currently going on in Russia cannot fit into their own historical patterns, to which they constantly refer in order to justify their reluctance to look into the sources of our mentality and social evolution.

This is more necessary for the West than for Russia, because one alternative to this natural maturation of civil society, which is unprecedented in Russian history, is the immediate recoil to its customary authoritarianism and self-imposed isolation.

Boris Tumanov is is a Moscowbased journalist focusing on international affairs. After reporting from Western Africa, he was the Moscow correspondent for the Belgian Le Libre Belgique newspaper. He is a regular contributor to the Polish and French media.

Originally published on

comparing the west and the Rest Ian Pryde

special to rbth

W

ith emerging markets expected to grow appreciably more than the stagnant West this year, expect economic power to continue shifting to the East in 2012. But despite the growth, are the claims of emerging markets about their superiority and the bankruptcy of the West really true?

The answer has profound implications for the global economy and the battle of ideas in politics and international relations.

From the business point of view, dynamic growing markets offer excellent investment opportunities and returns, guaranteeing a pipeline of I.P.O.s, M&A deals, bond issues and equity investments — but it’s hard to see how this translates into overall superiority.

High growth in poor, developing countries is one thing, but quite another in rich, mature markets. For all their dynamic growth, the BRICS and virtually all the other emerging markets remain very far behind the developed countries — even those with huge debt. Moreover, repeated opinion polls consistently show relative-

The West has lost its direction and selfconfidence, plagued by doubt about its whole socioeconomic model. ly high levels on the OECD’s“life satisfaction index”of its 34 members, with Scandinavians and Canadians among the happiest people despite their high taxes.

And yet, the West has lost its

direction and self-confidence, constantly castigating itself for past sins such as slavery and colonialism, and now more than ever plagued by doubt about its whole social, political and economic model and a lack of pride in what it has accomplished. It was, after all, the West that invented the modern world. Virtually everything in science, technology, economics, business, politics, ideology and art comes from Europe or its North American and Australasian offshoots.

The Rest is — up to now at least — largely following the well-trodden Western path and has yet to come up with genuinely new businesses.

But at a time when the West faces serious economic challenges, it is undermining its own future by compounding its chronic inability to provide outstanding mass education and training with

cuts in research and development.

In a very real sense, this challenge is one of numbers rather than of superior economic models. Singapore’s per capita G.D.P. is forecast at $52,220 in 2012, but with a tiny population of 5.4 million, it hardly causes sleepless nights in Western defense ministries. The real challenge to the West comes from the big populations and increasing assertiveness of many countries among the Rest as their total G.D.P. catches up and exceeds that of the developed nations. For instance, on being asked recently whether Russia should join the E.U.,Vladimir Putin answered that it should sort out its own problems first.

Much more articulate and influential in recent years than Vladimir Putin, however, has been Kishore Mahbubani, dean and professor in the practice of public policy at the Lee Kuan Yew

How N.G.O.S can Help Anatoly Golubev

L

special to rbth

ast year’s turbulent events in the Middle East — and the recent protests in Moscow — show that fighting corruption is crucial if we want to avoid a Libya-style revolution in Russia. And central to that struggle is the relationship between business and nongovernmental organizations (N.G.O.s).

One way to promote this relationship is the “World Without Corruption” program, the full name of which is “Collaboration between Civil Society and the Private Sector to Advance the United Nations Convention Against

Corruption: Progress Through Synergy.”It is different from similar initiatives because it aims to prevent the possible involvement of businesses in corrupt schemes at the onset, rather than simply punishing violators of the law.

The negative and critical bias that has prevailed in the anticorruption activity of N.G.O.s makes it currently impossible for businesses and others to openly participate. Private financial support for anticorruption activity on an international scale has been limited to guilt gifts: Funding from private corporations is most often a public effort at redemption after they have been punished for corrupt schemes. But to effectively fight corruption, each business

Letters from readers, guest columns and cartoons labeled “Comments” or “Viewpoint,” or appearing on the “Opinion” page 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 US@rbth.ru

entity should have the opportunity to participate in funding specific anticorruption projects that meet the company’s interests and experience. The company should not only have the possibility to fully control the use of allocated

Compliance systems do not work because they only target corruption among lower and middle management. resources by the respective N.G.O., but to participate in the project independently or with the N.G.O. to realize selected stages.

One such success story during our six years of work came from a particularly corrupt sector of the economy: construction. In the northern Russian city of Syktyvkar, we signed an agreement with a building company to establish independent expert oversight of each phase of the construction process. The price of a square meter of real estate within the building in question decreased from around $2,500 to $1,000.

We also established the AllRussia Competition for Exposing Corruption in Media, which has brought 400 reporters from all across the country to receive awards in Moscow for investigative journalism that uncovered

This special advertising feature is sponsored and was produced by Rossiyskaya Gazeta (Russia) and did not involve the reporting or editing staff of The new york times. web address http://rbth.ru E-mail us@rbth.ru Tel. +7 (495) 775 3114 fax +7 (495) 988 9213 ADDRESS 24 Pravdy STR., bldg. 4, floor 7, Moscow, Russia, 125 993.

Evgeny Abov Editor & publisher Artem Zagorodnov executive Editor elena bobrova assistant Editor lara mccoy guest editor (U.S.A.) olga Guitchounts representative (U.S.A.) andrei Zaitsev head of photo Dept Milla Domogatskaya head of pre-print dept maria oshepkova layout Vsevolod Pulya Online editor an e-Paper version of this supplement is available at http://rbth.ru.

School of Public Policy at the National University of Singapore.

Mahbubani’s Web site states unambiguously: “The past two centuries of Western domination of world history have been a major historical aberration. All aberrations end eventually. Asia will return to center stage again.

However, many leading global

The real challenge to the West comes from the big populations and increasing assertiveness of the Rest. minds cannot understand this because their mental maps have been trapped by narrow Western worldviews.”

It is meaningless to speak of any region being center stage be-

cases of corruption. This competition is critical to our efforts because media, as the major platform for dialogue between the state and ordinary people, plays the most important role in fighting corruption.

Another problem is that compliance systems have become an integral part of the corporate policy of large companies, which allows companies to act as if they are making progress, but codes of conduct, internal controls and staff training do not in and of themselves decrease corruption.

Such systems are usually designed to ensure the integrity of middle and low management levels, while in highly corrupt markets, top management is often involved in corruption schemes as well. Instead of further complicating anticorruption compliance systems, simpler and less expensive technology could be utilized to counter corruption. The basis for such

fore the Europeans began their global outreach in the 1490s and linked up the world.

More worrying, though, is that Mahbubani shows no sense here that domination per se might be a bad thing, no sense of the need to work together to solve global problems. Nor is there anything about squaring the circle of combining rising per capita income with sustainable development. It’s all about power and glory.

The danger inherent in the rise of any former underdog with this kind of attitude was best summed up by Albert Camus in his 1951 book-length essay “The Rebel”: “The slave begins by demanding justice and ends by wanting to wear a crown. He must dominate in his turn.”

Ian Pryde is founder and C.E.O. of Eurasia Strategy & Communications in Moscow.

technology should be a mutually beneficial system that has been carefully thought through with anticorruption N.G.O.s. Based on the practical experience of the Interregional N.G.O. Committee for Fighting Corruption, it’s possible to say that no corporation can reliably withstand the pressure of corruption alone.

Only consolidation and coordination of joint efforts between anticorruption N.G.O.s and civil society institutions can provide the required synergies. The effect of the coordinated actions of a small number of organizations can exceed the efforts of the separate activities of a large number of anti-corruption projects.

Anatoly Golubev is chairman of the board of the N.G.O. Committee for Fighting Corruption and steering committee member of the U.N. Global Compact Network Russia.

To advertise in this supplement, contact Julia Golikova, Advertising & P.R. director, at golikova@rg.ru. © copyright 2012, 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 the contents of this publication, other than for personal use, without the written consent of Rossiyskaya Gazeta is prohibited. To obtain permission to reprint or copy an article or photo, please phone +7 (495) 775 3114 or e-mail us@rbth.ru with your request. Russia beyond the headlines is not responsible for unsolicited manuscripts and photos.

ADVERTISEMENT

ADVERTISEMENT

MOST READ Music Without Borders http://rbth.ru/14106

Theater New York playwright looks to Russian to express a gulf between her characters

There’s Nothing More to Be Said, So Say It in Russian

mother, Gloria, a lyrical poet, committed suicide a few years before the play opens. Harper’s father, Paul, was his wife’s editor. After her death, he sends his daughter away and boards up their house, a hideously imprecise way of dealing with the emotions he cannot even name.

“I always imagine Paul wanted to be a writer and was drawn to Gloria — a wild, expressive person,” said Metzler.“He would improve her writing by reining in her spirit. But he did not improve her spirit.”

The playwright grew up in Kingston, N.Y., in what she called, “A Royal Tannenbaum” kind of family of brilliant eccentrics and overachievers, some of them estranged.

“There is a lot of Harper in me,” Smith Metzler said. “For almost a decade, my father and I were very estranged. When we finally reunited, it was bittersweet.

But it was also wonderful to get to know each other again.

That’s why I think of the play as a comedy, not a tragedy. I think it’s so hopeful.”

Playwright Molly Smith Metzler uses the Russian language to express a gulf of grief between father and daughter in her play “Close Up Space.”

NORA FITZGERALD

RUSSIA BEYOND THE HEADLINES

HER STORY

Molly Smith Metzler

David Hyde Pierce and Colby Minifie star as father and daughter in “Close Up Space.”

PRESS PHOTO (2)

Imagine your teenage daughter suddenly starts speaking a language you don’t understand — then again, maybe this isn’t so hard; this happens to everyone who has children. In “Close Up Space,” a world premiere which opened at Manhattan Theatre Club’s City Center stage last month, Harper (played by Colby Minifie) gets kicked out of boarding school. The 18-year-old returns to New York and refuses to speak anything but Russian to he r bewilderedfather.

The acerbic play spins comedy out of tragedy, showcasing the joyful talent of Molly Smith Metzler, a 33-year-old playwright. The title of the play, “Close Up Space,” refers to the editing symbol used to tighten up the space between letters. It could also more loosely refer to closing up the space between people stricken by grief and fear. The play is directed by Leigh Silverman, who recently earned kudos for her direction of the play “Chinglish.”

“Close Up Space” stars fourtime Emmy award winner David Hyde Pierce as a major editor in one of NewYork’s big publishing houses. About Hyde Pierce, the playwright said, “I don’t emote [during readings]. But I cried in his reading, he was so vulnerable.”Hyde Pierce’s performance has been lauded by critics, even by those who wrote disappointing reviews after opening night.

Hyde Pierce’s character has a fierce passion for editing that is little help when he raises his eyes from the page. He can’t talk to his daughter, who burns with anger, and the Russian language becomes a metaphor for the abyss between father and daughter.

“We think of language as something to communicate,” Metzler said over a cup of coffee in the classic Times Square offices of her press agent.“My play is wrought with a lack of communication.

No one speaks the same language.”

Paul Barrow (Hyde Pierce) is a man who speaks editor; Vanes-

NATIONALITY: AMERICAN AGE: 33 STUDIED: CREATIVE WRITING

sa, his high-maintenance diva writer (played by Rosie Perez), speaks woman. The intern, Bailey, speaks bothVassar and Urban Outfitters, according to Metzler.

Barrow’s assistant (Michael Chernus) is a caretaker type who can’t fax or make calls, happens to be homeless and camps out in tents in the office (the play was written before Occupy Wall Street).

Most of the audience of nonRussian speakers feel some of Paul’s frustration as Harper speaks. What is she saying? Colby Minifie, playing an American student obsessed with Russia, also learned Russian for the part, working with a language coach.

More than once, the words of one

of Russia’s most revered poets, Anna Akhmatova, escape her mouth like blood on stone. At a certain point in the playwriting process, Metzler, who studied Akhmatova at Oxford University, said she realized that Harper had to speak Russian. “Close Up Space”went through many stages, she said.

Metzler hopes one day to bring the play to Russia.

Why the Russian?

In the play “Close Up Space,” Harper doesn’t speak English for good reason, it turns out. Russia is Harper’s intimate language of protest, of expression, of bearing witness to injustice and grief. Her

Molly Smith Metzler is the author of “Close Up Space” (Manhattan Theatre Club), “Elemeno Pea” (Humana Festival of New American Plays, South Coast Repertory (upcoming), “Training Wisteria” (Summer Play Festival, Cherry Lane Mentor Project) and “Carve.” Her work has been developed by the Eugene O’Neill Theater Center, Manhattan Theatre Club, Chautauqua Theater Company, the hotINK International Festival of Play Readings, and the Kennedy Center. Metzler is a graduate of SUNY Geneseo, Boston University, N.Y.U.’s Tisch School of the Arts and The Juilliard School, where she was a two-time recipient of the Lecomte du Noüy Prize from Lincoln Center.

She lives in Brooklyn.

Music Newest piano prodigy finds passion more in his music than in his growing fan base

Trifonov Playing for Keeps See a video of Trifonov at work at rbth.ru/13711

An Actor Takes on the Theater of the Political Stage John Freedman

THE MOSCOW TIMES

P

rime Minister Vladimir Putin’s televised talk in December — billed as “A Continuation of the Conversation” — had hardly begun when actor Alexei Devotchenko sent out a salvo on Facebook, indicating he was following the event on Ekho Moskvy radio.

“On Ekho they’re saying that the vast majority among the police are on the side of the people,”Devotchenko wrote.“How about arresting Putin right in the middle of today’s ‘live broadcast,’ right in the middle of his, so to speak,‘continuation of the conversation?’”

Not everything Devotchenko writes on Facebook, or says in public, can be printed in a newspaper. He has emerged as, arguably, the most outspoken political commentator in the world of theater and film. His is an angry, strident voice that often resorts to the riches of Russian obscenities to bring his exhortations home.

That is not to say that his arguments lack coherence or intelligence. Devotchenko frequently expresses himself with force and clear thinking in interviews, open letters and in popular blog posts on LiveJournal, the Ekho Moskvy Web site and elsewhere.

Hailing from St. Petersburg, Devotchenko was at the forefront of a loose public movement attacking Valentina Matviyenko for corruption and a lax attitude to residents’ needs during her term as St. Petersburg governor.

There were no signs that this “victory”gave Devotchenko reason to ease up his public appeals, however. On the contrary, having relocated to Moscow himself, he redoubled his efforts to speak out against Putin and President Dmitry Medvedev.

Most recently, at the end of November, he relinquished all the state awards he has accumulated over his career, includ-

Sergei Babayan

"

If I say that Daniil has a sophisticated emotional palette, an open, pure, passionate heart, sharp musical intellect and absolutely effortless pianistic facility, that will not define what really makes him so special.

The most important thing is his overwhelming love for music. It is disarming.”

AYANO HODOUCHI SPECIAL TO RBTH

Barry Douglas ITAR-TASS

"

Trifonov plays with a passion and sincerity that touches the audience.”

Trifonov looks like a teenager, but plays with passion beyond his years.

ended, he arrived in Moscow for the International Tchaikovsky Competition.

At the finals, Trifonov set himself apart from the others by performing Chopin’s Piano Concerto No.1 instead of typical heavy competition fare such as Rachmaninoff’s Piano Concerto No.3 (which three of the five finalists played). Initially, Trifonov also wanted to learn the darkly resplendent Rachmaninoff 3. He wanted the challenge, he told his teacher at the Cleveland Institute of Music, Sergei Babayan. He argued that no one had ever won this competition by playing Chopin, to which his mentor replied,“Prove that you can win by

playing Chopin. Be the first to do it.” And he did.

After his win, Trifonov was swamped with concert offers. He received 150 for the following 12 months, and whittled the list down to about 85.“At my age, 150 would be suicidal,” he said. Although time is scarce, he usually sets aside five to seven hours a day for practicing.

Trifonov moved to Moscow when he was nine to study with Tatiana Zelikman at the Gnessin School of Music. He stayed with her until he was 18, when he came to the United States on a scholarship. Zelikman recommended him to Babayan, with whom he still studies in between concerts.

That he continues to study is apparent from the way he plays, as if nothing else exists in the world. His concentration and focus are remarkable. Irish pianist Barry Douglas described Trifonov as “playing with a passion and sincerity that touches the audience. He is completely absorbed by the music he plays.”

Said Sergei Babayan, “If I say that Daniil has a sophisticated emotional palette; an open, pure, passionate heart; sharp musical intellect; and absolutely effortless pianistic facility, that will not define what really makes him so special. The most important thing is his overwhelming love for music. It is disarming.”

ing two State Prizes and the status award known as Honorary Actor of the Russian Federation.

Equally as important, the actor brings his convictions to his art.

In Kama Ginkas’s production of “The Diary of a Madman” at the Theater Yunogo Zritelya in Moscow, Devotchenko incorporates strokes of political commentary as he plays a man who is hounded by society and his own demons, and who grows more belligerent as his grip on sanity increasingly eludes him. A scene of him slapping photos of Medvedev, pop stars Fillip Kirkorov and Alla Pugachyova on a wall alongside his own portrait is loaded with poison irony.

In “Farewell Waltz,” Alexei Devotchenko uses Joseph Brodsky’s words to paint a picture of a person alone in society.

Devotchenko also carries his message in a one-man show called “Farewell Waltz,” directed by Vladimir Mikhelson. The actor has perfomed this piece for the last six months on various stages around Russia. The show is a piece cobbled together out of poetry written by Nobel Prize– winning poet Joseph Brodsky. But it begins and ends with recordings of historical broadcasts that frame everything in between in a political light.

But in reality, the performance of “Farewell Waltz” has a minimum of politics at its core. Instead, Devotchenko uses Brodsky’s works to paint the picture of a person alone in society, one who is constantly at the mercy of the social machine. We are introduced to simple people who have been lost to their friends and themselves, or ground under by the complexities of life. They live normal lives colored with life’s usual little tragedies.

Yet politics is never far from the surface, no matter what the topic of a given scene.

READ RUSSIA

RBTH CONTINUES ITS COLUMN ON BOOKS THAT WILL BE PRESENTED AT BOOKEXPO AMERICA. THE EVENT, SCHEDULED FOR JUNE 4–7 IN NEW YORK CITY, WILL FEATURE RUSSIA AS THE GUEST OF HONOR.

A Post-Modern Sci-Fi Reality Not So Far from the Truth Phoebe Taplin

IN THEIR OWN WORDS

07

THEATER PLUS

SPECIAL TO RBTH

At 20, Daniil Trifonov is winning global recognition for the fanatic fervor he expresses toward his music. He has only begun his touring career, which took him around the world in 2011.

Daniil Trifonov, the 20-year-old pianist from Nizhny Novgorod, has only begun the hectic and exhausting life of international touring. The day before his Carnegie Hall debut in October 2011, Trifonov was backstage, nibbling on a small bag of nuts. “I don’t always have time to eat, but I make time to practice,” he said, referring to his impromptu lunch.

Pale and slight, Trifonov may look like a teenager, but he is becoming known as a comet of fierce musical talent, an unassuming young man who approaches his music with a focus nearing fanaticism. Despite his growing fame, it seems that he has hardly been touched by his sudden stardom and that all he cares about, still, is the music.

Trifonov has been at the center of a whirlwind since he won third prize at the XVI International Chopin Piano Competition in Warsaw in late 2010.

Prizewinners’ concerts took him around the globe, then in May 2011, he won the Arthur Rubinstein International Piano Master Competition in Tel Aviv, which sparked a dizzying two weeks of concerts. In mid-June 2011, the day after those concerts

Culture

RUSSIA BEYOND THE HEADLINES

SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU

TITLE: THE HALL OF THE SINGING CARYATIDS AUTHOR: VIKTOR PELEVIN PUBLISHER: NEW DIRECTIONS

I

n this surreal story by Russian master of postmodern science fiction Victor Pelevin, young Lena is employed to stand naked for hours at a time and sing — when she is not indulging the excessive fantasies of oligarchs. She and her fellow “caryatids”are decorative pillars in an elite underground nightclub. The girls are injected with a classified serum, “Mantis-B,” which enables them to stand totally still for up to two days. Lena’s encounters with a giant, telepathic praying mantis while under the influence of the serum radically alter her perspective on the outside world, revealing an alternative universe of wordless clarity.

In true postmodern style, Pelevin intersperses these druginduced episodes with other voices. There are the pseudopretentious extracts from the magazine that Lena reads during her commute back to Moscow.

She also meets conceptual artists, girls dressed as mermaids, important clients in bathrobes, guards in suits, and the sinister, ironic-slogan-toting Uncle Pete.

Pelevin has been perplexing and delighting readers with his unique brand of polyphonic scifi comedy for two decades. His

first novel, Omon Ra, published in 1992, portrays a protagonist who attempts to escape the Soviet nightmare by becoming a cosmonaut, only to find himself part of a farcical, mock-heroic moon landing during which he drives his lunar bike along a derelict underground tunnel.

While the political landscape has altered seismically around him, Pelevin has had no trouble shifting his satirical focus from the absurdities of the communist regime to the iniquitous consumerism of post-Soviet Russia.

There are interesting parallels between the different worlds of Pelevin’s novels: both Omon and Lena are victims of the systems they live under, duped by the authorities and kept, literally and metaphorically, in the dark. The building of a secret entertainment complex for the top politicians and businessmen living in Rublyovka, Moscow’s most prestigious suburb, echoes the real life construction of Stalin’s wartime bunker, where a whole sports stadium was constructed on the surface above it to distract attention.

Pelevin’s fantastical nightclub is built 1,000 feet underground to double as“a bomb shelter for the national elite in case of war or terrorist attacks.”

A hired“ideologist”tells the assembled sex workers that “enemies” are trying to brainwash them with a sense of economic injustice by printing photographs of oligarchs like Roman Abramovich and Mikhail Prokhorov and describing their freakish whims.

A brilliant, miniature gem, this novella introduces the absurdist Pelevin perfectly.

ADVERTISEMENT

08

ADVERTISEMENT

Feature

RUSSIA BEYOND THE HEADLINES

MOST READ Skolkovo Innovation Center Goes on the Road http://rbth.ru/13721

SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU

Entrepreneurs The Skolkovo School of Management and the Skolkovo Institute are hoping to create a new generation of capitalist innovators

The Business of Teaching Business IN NUMBERS

45

students were part of Skolkovo’s M.B.A. class in 2009, its first year of operation. The school hopes to enroll 240 M.B.A. students in 2014.

2

years of experience in a managerial position or in creating a business is required for students applying to the M.B.A. program at Skolkovo.

17

The Skolkovo School of Management, which counts among its peers the London School of Economics, celebrates its fifth anniversary this year.

ALEXANDER VOSTROV SPECIAL TO RBTH

As recently as five years ago, the suburban Moscow home of the Skolkovo School of Management was just an ordinary field overgrown with dandelions and daisies. Today, the only thing reminiscent of a daisy is this super-modern business center as viewed from above. Designed by British architect David Adjaye, the glass-and-concrete campus of the school is divided into oddly shaped petals called clusters.

And yet, despite the contribution of the celebrity architect, on the ground, the campus looks more like an ordinary shopping

PRESS PHOTO

Students at Skolkovo prepare for a lecture — part of their journey toward becoming innovative entrepreneurs.

mall. The courtyard is full of gadget-toting students strolling about lazily. They look like the affluent young people Russian comics and satirists have started to mock as “start-uppers” — educated men and women who hope to create the latest musthave product.

But some students are already outdoing the stereotype. Irina Linnik is one. Sitting in popular expat restauranteur Isaac Correa’s fashionable on-campus restaurant, her face is buried in her aluminum MacBook. Unlike many others, though, Linnik is not “liking” something on Facebook or retweeting funny cat posts; she is communicating with her business partners. Linnik invented the Life Button, a simple device designed to help people with elderly parents.“It’s no secret that the healthcare system

in our country is far from perfect,” Linnik said. “Even if you get through to emergency services, there’s no guarantee an ambulance will arrive on time.

I have an elderly grandmother myself, so it’s an important issue for me, too. I devised a special button that mounts on a cell phone or wrist strap.”

Thanks to a special motion detector, the sensor will work even if the person wearing it has fallen or is unconscious. Once activated, the signal is transmitted to a call center where employees decipher it and look the client up in a database that includes his or her medical records, insurance information, allergies and more. A call center employee then contacts the relatives, who decide whether to call a regular ambulance, a private one or deal with the situation them-

selves.“Has the Skolkovo school helped me?” Linnik asked, rhetorically.“Yes, of course. When I studied at the Higher School of Economics, my professors ham-

“Our mission is to restore people’s respect for honest labor; to give a shot in the arm of Protestant work ethic.” mered into me the idea that entrepreneurship is bad. It was only here that I realized that making money is not only cool but also interesting.”

Irina Prokhorova, Skolkovo’s Business Development Director, expressed a similar opinion.“For a long time, our country’s traditional idea was that working hard, let alone making money,

Innovation Scientists with good ideas but no money are looking to Skolkovo for support

Venturing into the Nuclear Zone In the wake of the Fukushima disaster, a new radiation monitoring device that works with mobile phone and sat-nav systems is being marketed.

ALEXANDRA BAZDENKOVA SPECIAL TO RBTH

After the radiation leak at Japan’s Fukushima Nuclear Plant following a devastating tsunami last spring, Russian research engineer Vladimir Yelin, 54, was asked to write an opinion piece about the incident. After reading into the fears of people living in the area around the plant, Yelin came up with an idea for a device that would give individuals more information about their personal threat from radiation exposure.Yelin, who is also head of the company Smart Logistic Group designed a radiation dosimeter that can be integrated with mobile phones or added as an application. He called it the Do-Ra, a derivative of dosimeterradiometer.

The Do-Ra mobile application operates in many different ways.

It can work as a radiometer that displays a radiation map of a given area, such as a reservoir or plot of land, on the screen of a mobile phone. In this mode, the device has three levels of alert and displays them on the screen.

They are normal (green), high risk (yellow) and evacuate as soon as

The Do-Ra can transmit radiation readings to anywhere in the world.

possible (red). The device can superimpose the radiation map onto a downloadable world map on the screen and users can add their GPS or Glonass measurements to it, providing them with more personal information. The application also has a dosimeter function, which displays the level of radiation being absorbed by the user. In the event of exposure to a critical dose, the Do-Ra alerts its user through audio and visual signals.

Finally, in another mode, the phone can provide relevant information on potential risks for

different organs of the body associated with absorbed radiation levels. Users or their doctors can then access the data from anywhere in the world.

Although the idea came toYelin quite easily, bringing it to fruition was another story. “At the initial stage, assembling a team of developers was tricky,” said Yelin.“I stumbled upon a worthy team by pure luck.”

A slightly bigger problem was obtaining financing. “Very few Russian banks are prepared to lend money for such projects,”he continued. “Venture funds that

http://english.ruvr.ru

was somehow shameful,”she said.

“So, our mission is to restore people’s respect for honest labor; to give them a shot in the arm of Protestant work ethic, if you will.”

That shot doesn’t come cheap: The 18-month-long M.B.A. course at Skolkovo costs around $80,000 — on par with established giants such as France’s Insead, or the London Business School. But many believe it is worth it. The curriculum is very hands-on. Students travel to implement projects in Russian regions or carry out ideas in the BRICS countries, and upon graduation, there is the possibility of an angel investor. Students can select a mentor from among leading Russian businesspeople, including Ruben Vardanian, C.E.O. of investment bank Troika Dialog, and Leonid Melamed, gen-

Tech Transfer Making money from ideas

The Rules of Supply and Demand, Applied to Scientific Expertise The know-how of Russian scientists is in demand in the West, but connecting specialists with companies who need them can be easier said than done.

MIKHAIL BORISHPOLSKY SPECIAL TO RBTH

While Western scientists are used to the idea of developing ideas with an eye towards marketability, this mindset is largely missing among Russians brought up in the Soviet Union, and even younger scientists have inherited this bias.Today, tech transfer projects are looking to change the mindset — and money helps.

In Russia, tech transfer — the process of linking innovators and creators with businesses that need their ideas and products — happens in two ways.

First, foreign tech transfer agencies place a request on behalf of a foreign client for a specialist with a certain set of skills, or even a specific person. “The most frequent customers are American technology institutes fulfilling complex orders for industrial corporations. The leading tech transfer customer is the Massachusetts Institute of Technology (M.I.T.). We fulfill six to 10 orders of this kind annually.

Russians are traditionally strong in physical chemistry, astronomy, quantum physics and microbiology,” said John Neiper, Eastern

European Manager for the tech transfer agency Griffin Assuming the negotiations between the parties go well and a contract is signed, the agency earns a fee equal to a portion of the scientist’s salary.

Another way to connect scientists with those who need their skills is through Russian universities or corporations working in partnership with a similar institution abroad.They allow a young specialist to work for the overseas partner for a set term. The employee shares his or her knowledge with the foreign partner and has the chance to make a higher salary than he or she could command at home.

At the moment, the construction sector dominates in this kind of transfer.“Companies like ours have unique technologies for building the most complex spatial structures,”said Ilya Ruzhansky, deputy director of Mostovik, a major design and construction firm operating in Siberia and Russia’s Far East.“Back in the Soviet era, we mostly had contracts in Africa and Asia, and partnership with the West was minimal; now, graduates of the Moscow Architectural and Construction Institute capable of designing mileslong bridges are worth their weight in gold. They can compete for annual contracts of up to $200,000.”

Discover a whole new world

recommends...

Find out the frequencies in your area

specialize in financing new businesses are only testing the waters in the huge Russian market. Most don’t like to risk their capital on inventions.”

Yelin decided to try his luck with the Skolkovo Innovation Center, the much-discussed Russian Silicon Valley-in-the-making. He used Skolkovo’s Web site to create a roadmap for the project, including a detailed description of its research and development components and a business plan. After an assessment by a panel of 10 industry experts, the board informed Yelin that his project fulfilled the requirements for Skolkovo funding.

“I have become a fully fledged participant in Russia’s innovation process,”Yelin said. “As a Skolkovo resident, Intersoft Eurasia, the operator of the Do-Ra project, will pay only a 14 percent payroll tax. We will be exempt from all other taxes. One can only qualify for such exemptions under the Russian tax system by conducting R&D work as part of proprietary innovation projects with the subsequent commercialization of the invention.”

At the moment, the company representing the invention is in negotiations with mobile phone producers Sony Ericsson and Fujitsu. According toYelin, the price of the device purchased as a separate application will be somewhere between $30 and $50, but if the device is to be integrated into the phone in the production process at the factory, the cost could be cut to $10. The trial version of the Do-Ra mobile application is already available on the Android market and Yelin hopes to expand it to other mobile devices soon.

individuals and businesses from both Russia and abroad contributed to the Skolkovo School of Management as founding partners.

eral director of the Alemar Investment Group. If the mentor likes a student’s idea, it will be implemented quickly and its creator will be poised for a bright future. This is the fundamental difference between start-ups “made in Skolkovo” and those made elsewhere: Researchers here don’t get cash without a solid business plan, the investment procedure is strictly regulated and major Russian corporations implement most inventions.

It’s no secret that many established Russian companies are stagnating. Their old-guard executives have exhausted their potential, while the new ones expect starting salaries disproportionate to their proven contribution. Some members of Russia’s business establishment see the Skolkovo system, in which those with real ideas pay for the opportunity to share them, as a way to maintain their firms’ prestige while getting what they want.

And, as is the case in many bigname Western institutions, the tuition at Skolkovo is not so much compensation for the school’s expenses as it is a pass into a certain circle, which until recently was accessible only to those born into the right family or who had substantially more than $80,000 in the bank.

“The country always needs thinking people who can generate profits,” said Irina Prokhorova.“It wouldn’t be an exaggeration to say that we, to the extent of our modest abilities, are creating exactly that kind of generation. Judging by the interest expressed in our graduates not only by business but also by government agencies, the project will succeed.”

It’s hard to argue with that: Vladimir Putin has repeatedly spoken out recently about the important role foreign investment plays in Russia’s future. And an incubator for startups may help the country to attract it.

Don't miss our "Photo of the day" on Facebook!

www.facebook.com/russianow

C O N TA C T U S : F o r e d i t o r i a l i n q u i r i e s , p l e a s e , c o n t a c t u s @ r b t h . r u

be i r c s Sub

to our weekly newsletter www.rbth.ru/subscribe

The 47th Petroushka Ball Friday, February 10, 2012 Waldorf-Astoria Grand Ballroom

rbth.ru/14228

For partnership or advertising contact sales@rbth.ru

ph. +7 (495) 775 31 14