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THE ECONOMIC TIMES IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

MONDAY, DECEMBER 24, 2012

Putin’s India hope and challenge India and Russia are set to infuse new energy into their special ties and bolster their cooperation on global issues

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DIPLOMACY: Pacts expected in areas of energy, trade, infrastructure and technology

AUROBINDA MAHAPATRA RIBR

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ussian President Vladimir Putin’s visit to India for the 13th annual summit brings into focus the seriousness on part of the two traditional time-tested partners to expand and diversify the strategic partnership between India and Russia. This will also be the first visit of Putin as president of Russia after a gap of four years and marks the high point of the 65th anniversary of the establishment of diplomatic relations between the two countries. The visit by Putin, the primary architect of the special and privileged partnership, will seek to address a slew of contentious issues in bilateral issues ranging from Sistema and nuclear power plants to Admiral Gorshkov. In the past few months, there are some sections in media which have exaggerated differences between the two countries especially in the fields of defence, telecommunications and nuclear energy. The differences may persist and even fester, but the basic cordiality and robust architecture of bilateral cooperation will remain unbroken. “The leaderships of the two countries have huge amount of goodwill to continuously strengthen this traditional, time-tested friendship between India and Russia, which has developed into a ‘special, privileged strategic partnership,’” India’s ambassador to Russia Ajai Malhotra told reporters. “The progress of our economies in recent years has opened new vistas for cooperation, which will undoubtedly further intensify,” stressed the envoy.

The annual summit will have a wide-ranging and substantive agenda and focus on win-win situations for both the countries. Widening the net of trade relations is already in process, and the visit may witness signing of agreements in the areas of energy, infrastructure and technology. While India may expedite the process of nuclear cooperation

with Russia by facilitating the process of building new nuclear plants, Russia may commit expediting the process of delivering Admiral Gorshkov to India. The visit will likely witness the signing of agreements in areas of arms and armaments. This month only engineers from both the countries have started working on $600 million transport aircrafts.

The summit will also see the two close partners enhancing their cooperation on international issues in view of changes in the world order. In the last five years, significant changes have taken place in the regional and international scene. The US has reinvigorated its Asia strategy by emphasising on its growing presence in the region. The recent visit by the US as-

sistant secretary of state for South and Central Asia to Bangladesh and Bhutan, and his emphasis on establishing a New Silk Road and Indo-Pacific Corridor are some of the elements of this new Asia strategy. China too has grown stronger in the mean time, with prospects of surpassing the US economy before 2030. The AsiaPacific has recently witnessed rising frictions between China

and Japan, and an assertive North Korea. In the Middle East as the Syrian crisis unfolds, the international involvement will likely grow in coming days as the Assad regime weakens. The growing power of international terror networks and the spike in sectarian strife have triggered concerns in both India and Russia. In this context, the volatile situation in Afghanistan

remains a matter of great concern for both India and Russia, and one can expect discussions between the leaders on how to cooperate closely in stabilising the country. The Taliban remains as indomitable as it was a decade ago. It has already unveiled a plan for an Emirate of Afghanistan, where dogmatism will be the mainstay. Radicalism still remains a crucial issue. Afghanistan’s neighbourhood countries have witnessed spillover effects of instability and violence. India and Russia have reiterated their common position on a peaceful, regional driven, transformation of conflict in Afghanistan. The coming months will likely be more turbulent as the country prepares for general elections in 2014 to elect its President. India and Russia, key players in Eurasia, have constituted joint working groups on terrorism and on Afghanistan, and they will likely further strengthen bilateral mechanisms to address the issue. Against this backdrop, both countries will reiterate their commitments to the evolution of a multipolar world order, which transcends any particular ideology or centre of power. Bilaterally as well as multilaterally, the visit will help dispel speculation about drift and uncertainty in India-Russia relations. Both the countries have continued this annual summit for the past twelve years, and any break in it could have been a spoiler. Putin, who initiated this partnership, will play a key role in strengthening it. The December 24 meeting will not just be another formal summit, but will have far-reaching significance for the future of the two countries and the evolving world order.

G20: Stimulating economic growth and creating jobs high on agenda

YURI PANIYEV RIBR

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his month, Russia took over the presidency of the G20, the club of the world’s biggest economies that accounts for 90% of global GDP and 80% of world trade and two-thirds of the world’s population. From December 1 2012 until November 30 2013, Russia will hold the presidency of the G20. Ksenia Yudayeva, Russia’s sherpa (representative) to the G20 and head of the Russian president’s experts directorate, told RIBR that the G20 summit would be held in St Petersburg on September 5-6, 2013. Early bilateral meetings have already been held in Moscow to help establish the agenda. Last week, the presidential priorities were presented to a conference on the promotion of economic growth and sustainable development last week. “The main task of the Russian presidency will be to concentrate the efforts of the G20

on developing measures to stimulate economic growth and create jobs,” said President Vladimir Putin recently. In line with these priorities, Russia intends to discuss such traditional G20 themes as the world economy, job creation, reform of the world monetary system and stability in global energy markets, promoting international development, strengthening multilateral trade and fighting corruption. Russia is proposing two new themes: investment financing as the basis for economic growth and job creation; and the modernisation of national systems for state borrowing and sovereign debt management. The key issue the presidency needs to address, says Finance Minister Anton Siluanov, is restoring investor confidence, which has been hit by slowing economic growth and recession. Economic growth in the locomotives of the world economy, including China, is still slowing and the southern countries of the EU are still steeped in recession. Major investors are

wary of losing money in the crucible of another crisis. Developing countries, especially in Latin America, are most affected. Siluanov feels the investor confidence is crucial if we are to jump-start economic growth. Another summit priority is sorting out state debts; that, in many countries, exceed 100% of GDP. Debt will be high on the G20 agenda. Moscow will propose specific debt-reduction programmes, says Siluanov. Asked by Russia Now how the global financial architecture could be improved, Siluanov said the formula for calculating International Monetary Fund (IMF) quotas would be discussed. Russia’s share in the IMF capital is 2.8% compared with the US’s 17% and the EU’s 30%. “GDP should be the decisive factor in distributing quotas,” says the minister. This approach is shared by the BRICS, the US and some other G20 members. Small European countries object because they fear IMF quotas would be cut drastically. Siluanov points out that the distribution of IMF quotas did not recognise the new contemporary realities: the emerging countries have changed greatly even in the past five to 10 years. “It is

High stakes: Russia will hold the G20 summit in St. Petersburg on September 5-6, 2013. natural for such countries to want more clout with the IMF and the world financial system.” A new feature of the Russian presidency will be a BRICS summit held on the fringes of the G20 summit. BRICS members already have proposals for reorganising the key international financial and economic institutions. In promoting reform of the international financial architecture, the BRICS countries have more than their own interests in mind, says Vladimir Davydov, director of the Russian Academy of Science’s (RAS) Latin America Institute. “BRICS has within its purview much broader interests than all the emerging economies and emerging countries. Proof of this is

BRICS’ programme for reforming the IMF and the World Bank. It would strengthen the position of the whole group in the key international finance management structures.” Prof Gennady Chufrin of the RAS Institute of International Economy and International Relations feels that Russia, as president of the G20, would have an excellent chance of enhancing the role of BRICS in the current balance of power. “At present, we see an obvious prowestern tilt in the activities of the IMF and the World Bank. That tilt needs to be corrected in favour of the developing countries and BRICS, and Russia as president of the G20 has such a chance [to achieve this],” he stressed.

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Russia will leverage the G20 presidency to restore investors’ confidence and push for debt reduction

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Focus on reforming financial governance, a bigger BRICS’ role


IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

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Business Report MONDAY DECEMBER 24, 2012

INVESTMENT: Lack of developed infrastructure, trained manpower key reasons

BIG PICTURE

How to clear hurdles and spur Russian FDI in India

It’s time to bridge economic deficit ANDREI VOLODIN Expert In the first decade of the 21st century, Indo-Russian relations were put back on strategic track. However, experts still have a sense of “unfinished business,” as they tend to be nostalgic about the heyday of bilateral relations in the 1970s and 80s. In spite of many initiatives, bilateral economic ties remain way below potential, with annual trade at around $10 billion. The economic relationship obviously lacks positive drive. How can the situation be changed? Initially, relations between the USSR/Russia and India were built on a geopolitical alliance, while economic ties evolved on the side. It is important to sustain the geopolitical nature of the relationship with India. The Russian state needs to regain strategic control over export flows to India and develop a clear strategy to advance economic relations. The potential for trade and economic ties lies in the statesponsored activation of traditional forms of cooperation, such as the modernisation of the Soviet-built plants in India. The introduction of breakthrough technologies in India is considered in a broader political and economic context as a means to boost not only the hi-tech industry, but the entire cluster of scientific, technical and productive forces. Russia should also follow the logic of “pinpoint action” in relation to India, especially in those areas where it retains a competitive edge, such as nuclear energy, space, engineering, and advanced weaponry. Looking further ahead, India could be offered pilot projects in industry and knowledge-based fields, such as pharmaceuticals, civil aviation, agricultural science, and agribusiness. Cooperation with India in the agricultural sector will set the tone for further achievements in Indian agriculture, already recognised

RIBR

Russian investment projects in India have great potential, but are still entangled in bureaucratic hurdles. According to Ernst & Young’s 2012 India attractiveness survey, the country is attractive for foreign direct investment, with 932 (or 20%) new FDI projects at a time when the global economy is still struggling to recover from the financial crisis of 2008–09. Russian investment in the country, however, continues to be slowed down by various factors. “FDI in India has been growing for the last several years and reached $44 billion,” says Y.S. Shashidhar, India-based senior manager for Frost & Sullivan. “We see FDI coming from the US, UK, the Netherlands, France, Germany, Japan, China and Singapore. But Russia is not yet in the top 10 investors.” “One of the biggest problems in India is the lack of developed infrastructure,” says Yaroslav Kabakov, head of the Finam Learning Centre, part of the Finam investment holding. “The advantage of India is the penetration of the English language that makes all business communications easier.” While the availability of low-cost manpower is an advantage, Kabakov says that India lags behind in trained white-collar employees and is handicapped by its modest per capita income. “However, for Russian investors India is interesting as a market that is less competitive compared to markets in developed countries,” says Kabakov. According to Russia’s State Statistics Service, in 2011 Russian investments in India stood at $126 million (mostly in

manufacturing), but were 17.8% less than in 2010. In the first half of 2012, Russia invested only $60 million in the Indian economy, while Russian cumulative investment in India by March 2012 stood at $623.5 million. Out of this figure, $561 million was direct investment. Trade between Russia and India in first half of 2012 amounted to only $5.7 billion, far below the target of $20 billion bilateral trade by 2015. Defence contracts and atomic power still play a key role in economic relations between India and Russia, says Pyotr Topychkanov, coordinator of the nuclear non-proliferation programme at the Carnegie Moscow Centre. However, in other sectors Russia seems to be losing its earlier strong positions. “We have recently lost tenders for renovation of units of two steel plants in Bhilai and Bokaro, built in the 1960s in collaboration with the Soviet Union,” he says. The most positive example of business cooperation between the two countries has been MTS India, the Indian unit of Russia’s telecom conglomerate AFK Sistema, but after a recent order by India’s Supreme Court, cancelling its licenses, the success of this project is questionable, too. Sistema Shyam Tele Services Ltd, Sistema’s Indian venture, operates in India under the MTS India brand. In February 2012 the Indian Supreme Court cancelled 21 of 22 SSTL’s 2G licenses, along with 100 licenses of other mobile operators. Sistema Shyam has invested some $3 billion in India, including $2.4 billion from Sistema and $600 million from the Russian government. Analysts say that with multi-billion dollar projects, diplomatic means could be used to

Russian investors may be interested in infrastructure projects in India. sort out both minor irritants and major issues. Recent examples show that having the Russian government as a stakeholder does not guarantee a smooth entry into India for investors. Russian steel giant Severstal’s $2 billion joint venture with India’s largest iron-ore producer, NMDC, has been frozen, as the parties are locked in a dispute over equal stakes. These difficulties have, however, not deterred Russian investors. Recently, Gazprom was reported to be in talks with Indian Oil Corp for a stake in a in a planned $793 million LNG terminal near Chennai. More projects in various sectors are going ahead, including in multi-brand retail, insurance and pension funds, as well as agriculture, aviation and energy sectors. Kabakov says that Russia’s biggest bank, Sberbank, was particularly active in India’s telecom and financial sectors. “Infrastructure projects such as the construction of roads, airports and power plants are also interesting,” he says. “However, the access to these areas is still complicated. Russian investors may be interested in infrastructure projects where the Indian government

A new wind, sunny days...

GAS : Gazprom wooing customers in Asia-Pacific region

LNG: Novatek firms up plan to bypass Gazprom’s monopoly Russian natural gas producer Novatek is poised to sign contracts to supply LNG from Yamal LNG project to Western Europe, Americas, Asia-Pacific OLGA SENINA RIBR

The Yamal LNG project should establish the right infrastructure for the extraction, refining, and export of hydrocarbons from the YuzhnoTambeyskoye deposit in the northeast of the Yamal Peninsula, which has around 1.3 trillion cubic metres of natural gas reserves. The project involves the construction of a gas liquefaction plant. Its LNG output will reach 5 million tonnes in 2016 and 15 million tonnes in 2018. The construction of the Sabetta multipurpose seaport began near the plant in July 2012. It should serve as a terminal for supplies of LNG, oil and gas condensate from Russia by

sea to Western Europe, both Americas and Asia-Pacific. The idea is to send ships eastward (via the Bering Strait) between July and November – when the Northern Sea Route is open for summer passage – and westward between December and June. The project, which is due for completion in late 2016, is co-owned by the Russian natural gas producer Novatek, which currently controls 80% , but is planning to reduce its stake to 51%, and France’s Total which holds 20%. While investment in the project is estimated at $18–20 billion, Novatek’s direct spending will reach approximately $2.4 billion, says Invest Café analyst Viktor Barkov. However, the monopoly

India, the new market of opportunity India may become one of Russia’s major partners in LNG supplies. Gazprom signed a 20-year contract for the supply of LNG with GAIL in early October, with India due to receive 2.5 million tonnes of LNG annually. The deal could pave the way for a slew of similar natural

gas contracts with other Indian companies. Gazprom signed MoUs with four Indian partners last year: GAIL, Gujarat State Petroleum Corp, Petronet and Indian Oil Company Ltd. The potential LNG supplies was estimated at 10 million tonnes (13 billion cubic metres of natural gas).

WEBSITE of the embassy of the Russian Federation in India www.rusembassy.in

would act as an owner. This would decrease the risks of projects failing due to bureaucracy.” Russia’s banks VTB and Sberbank have opened their first branches in India, and support trade deals between countries. “Telecom and financial markets are going to be the most perspective areas for investments in India. Sberbank is carrying out aggressive expansion plans in these sectors,” Kabakov says. Construction and engineering services are also considered promising areas, considering that India plans to invest $1.7 trillion in infrastructure over the next 10 years. Russian investors say that overcoming barriers such as thriving corruption, difficult legal registration procedures and complicated taxation policies that differ from state to state should be a top priority for the Indian government. Another area that requires urgent attention is that despite many pacts between India and Russia, including the Bilateral Investment Promotion and Protection Agreement signed in 1994, the protection of investments has been problematic in practice so far.

on natural gas exports belongs to Gazprom. Novatek co-owner Gennady Timchenko told Forbes that financing for Yamal LNG was complicated because of the monopoly’s position. Novatek, however, does have an ace up its sleeve to use against Gazprom. The company has filed an application with the Ministry of Energy for the right to export LNG directly. According to Russia’s Energy Minister Alexander Novak, a draft bill excluding LNG exports from the general natural gas export law (which designates Gazprom as the export monopoly) could be submitted to the government before the end of the year. Analysts are sceptical, however, that Novatek will be able to one-up Gazprom. Gazprom is counting on LNG exports to woo customers in the Asia-Pacific region. According to the company’s CEO Alexey Miller, its eastbound exports could catch up with or even surpass its deliveries to Europe. Gazprom exported 154 billion cubic metres of natural gas to Europe last year, but only 3.06 billion cubic meters in the form of LNG. Out of the 34 LNG shipments, 30 were sent to Japan, South Korea, China, Thailand, Taiwan and India.

With both Russia and India ramping up renewable energy plans, a new window of win-win cooperation has opened between the two partners. RAJEEV SHARMA Specially for RIBR

Renewable energy promises to be a potential area of cooperation between India and Russia, especially at a time when the international community is striving hard to combat climate change. India’s investment in this crucial sector has now exceeded $10 billion per year. The Indian renewable energy programme is primarily private sector driven and offers significant investment and business opportunities. India figures among the top five countries of the world in terms of renewable energy installed capacity and at present renewable power, with over 26 GW installed capacity, represents about 12.5% of the total installed power generation capacity in India. India aims to achieve about 55 GW of renewable power by 2017. India and Russia have decided to embark on a $180 million joint venture to manufacture 2000 tonnes of silicon ingots for India’s solar cell manufacturing. Top officials of RUSNANO, the nanotechnology initiative of the Russian government, and India’s Department of Science and Technology have been in close touch. The project is aimed at setting up a joint venture company in Russia to source the key component required for India’s fledgling solar energy initiatives. The company would manufacture silicon ingots which could be brought to India and sliced into thin wafers to make photo-voltaic cells for India’s solar mission. India has just released a draft of

ALAMY/LEGION MEDIA

ALEXANDRA KATZ

AFP/EASTNEWS

Many factors are slowing down Russian investment in India, but telecom and financial services are emerging as areas of promise.

globally as outstanding. In addition, increased contacts in the agrarian sector will help Russia address the nascent issue of cooperation between Russian and Indian regions. A pilot project between the breadbaskets of our two countries — Russia’s Stavropol and Krasnodar regions and India’s Punjab and Haryana states — looks promising. A powerful stimulator of bilateral ties would be to free up transport links between Russia and India. That is primarily a question of unfreezing the North-South International Transport Corridor, the heart of which has always been Iran. Therefore, the development of economic relations requires a trilateral format for top-level political decision-making in India, Russia, and Iran. In the defence sector, noneconomic factors are gaining importance. India’s leaders (like Russia’s) are trying to stimulate the creation and development of original national ideas and solutions in the field of military hardware. For both, it is important that the other is able to provide not only new and futuristic platforms, but also forward-looking ideas and concepts that could be incorporated into each country’s defence industry. Russia could reactivate the joint development and production of a fifth-generation light fighter, given the groundwork done in the field of strategic aviation. Relations with India were initially assisted by the two countries’ intellectual and cultural potential. As the lackadaisical public response to the Year of Russia in India and the Year of India in Russia showed, the intellectual and cultural base has eroded to its very foundation. A revival of ties to the heyday of the 1970s would be facilitated by greater interaction with the intellectuals of both countries and cultural contacts at the grassroot level.

its policy for Phase II of the Jawaharlal Nehru National Solar Mission. Since its launch, the mission has galvanised capacity building which has risen from less than 18MW to 1050MW. Phase I comes to an end in 2013. India is aiming at generating power to ten gigawatts in Phase II of the solar mission. In May 2010, Dmitry Medvedev, then Russian President, had announced that his government would strongly consider purchasing electricity generated from renewable energy sources to encourage development of renewable energy. Six months later, Moscow approved a $300 billion programme to make fac-

IN THE ECONOMIC TIMES Every second Wednesday since February 2013

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tories and buildings more energy efficient. In late 2009, Medvedev had announced to cut Russian energy consumption by 40 percent by 2020. The government has plans for 4.5 percent of Russia’s energy output to come from non-hydroelectric renewable energy sources. However, Russia has a long way to go to realise full potential of its vast renewable energy resources and opportunities. Russia’s focus has been on oil, natural gas and coal which constitute 80 percent of its foreign trade earnings. An intense Indo-Russian synergy here will be a win-win situation for both.


IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

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Business Report MONDAY DECEMBER 24, 2012

INTERVIEW

ALEXANDER KADAKIN

We have no other friend closer than India, our ties go from strength to strength: Envoy Russia’s Ambassador to India, H.E. Mr Alexander Kadakin, talks to RIBR about the upcoming official visit of President Vladimir Putin to India, dwells on Russia’s support to India’s global power aspirations and on mutual efforts to scale up bilateral trade.

President Putin’s visit to Indian falls on the auspicious year marked by the important milestone. However, in terms of interstate relations 65 years jubilee does not imply any autumnal sentiments. Our sisterly relations with great India are time-tested, mature and sophisticated on the one hand, and on the other – dynamic, confidential and future-oriented. The passing year saw a number of milestone events: the 65th anniversary of diplomatic relations, induction of the nuclear-powered submarine INS Chakra into the Indian Navy, upcoming launch of the NPP Kudanlulam first power unit, and the hugely successful Days of Moscow, not to mention the whole range of bilateral and multilateral activities, including the March BRICS Summit in New Delhi. While observing the general trend of Russian-Indian relations, one can notice the unprecedented level of goodwill and trust. It is only with the closest and long-standing friend that we share our best and razor-edge technologies and achievements both in military and civil spheres. Contrary to certain illintentioned predictions, the RussianIndian ties are in their prime. However, we have no intention to rest on the laurels or to slumber away in nirvana. We are determined to work even harder for further advance of special and privileged strategic partnership. There is no need to focus on the referred minor tensions which are unable to mar the spirit of our mutually beneficial cooperation, our keen and frank dialogue. We hold open and honest talks on all disputable issues. We are more anxious about the enormous untapped potential of our trade and economic relations which lag considerably behind our political interaction. I would say, it is the only area of bilateral cooperation which requires constant and undivided attention of our strategists. I am convinced that this issue will stand high on the agenda of the upcoming Russian-Indian summit talks.

Thriving India aspires for a decent place in the international arena. How can Russia help her, including in the framework of international organizations? Is Russia supportive of India’s accession to the SCO? Russia supports India’s aspiration to be more involved in various multilateral mechanisms given her proactive and multidimensional strategy in the international arena. Moscow considers New Delhi as a strong and worthy candidate, backs its ambition for the permanent membership in the UN SC and welcomes its intention to enter APEC. It is no secret that Russia is interested in and contributes to India’s inclusion into the SCO as a full-fledged

member. However, such decisions are not only for us to take, but are subject to consensus or voting procedures.

What role can Russia and India play in Afghanistan once the NATO troops are withdrawn? As regards the Afghan state-ofaffairs, our countries have adopted similar positions. Both Russia and India are worried about possible security aggravation after 2014. It is in our common interests to normalize the situation in Afghanistan and create conditions for peaceful and stable development. I am convinced that Russian-Indian cooperation in this area will further broaden, thus laying necessary groundwork for tackling regional security challenges, including the outward terrorist threat and the expansion of drug trafficking.

The dynamics of economic ties with India are quite discrepant. On the one hand, there are an increasing number of cases when political means fail and Russia loses in global competition for the Indian market. On the other hand, while having reservations about Russia’s investment appeal, the private sector does not get serious government support or a clear indication. As a result, despite all the efforts, the volume of bilateral trade turnover remains insignificant. What can be done to fix it? By the end of 2012, the bilateral trade turnover is expected to exceed 10 billion US dollars. The number is quite modest indeed, given the high level of political contacts between our countries. Still, it is heartening that this year we will manage to finally surpass this psychologically important mark. It is safe to say that we can expect further increase of bilateral turnover, given the positive trend of the recent years. Our mid-term target is to reach 20 billion US dollars by 2015. However, quantitative indicators alone cannot fully reflect the nature of our bilateral cooperation. One should understand that it is not the value that is of utmost importance for us, but the broader goods range which can be achieved primarily through a larger portion of science intensive and hightech products, i.e. those products that actually offer growth potential for the future. Generally speaking, the buyer-seller model appears to be obsolete nowadays and holds little potential under the current circumstances. Global trade today is largely a derivative of investment cooperation, unless we are talking about supplies of Indian tea or Russian oil in pure form. It is no secret that large-scale intergovernmental contracts, such as exports of heavy machinery for the construction of nuclear power plants, or steel mill upgrades, represent the lion’s share of Russian exports. But such projects are few and far between. Stronger ties between private businesses interested in carrying out joint long-term investment projects with minimal state participation should become a priority for Russian-Indian trade

today. Business activity has long established itself as a living, breathing, selfregulating mechanism. If, for example, Indian manufacturers understood that it would be more profitable to buy components from us rather than from Europe or Asia, because Russian technology is not only cheaper, but is also of better quality, no state or political resources would be needed to stimulate cooperation. In this case the role of the state would be limited to creating an environment where Russian businesses in India and Indian businesses in Russia would feel comfortable. The programme to set up joint pharmaceutical ventures in Russia with Indian capital and technology is a prime example. Hopefully, this model will be applied to other industries as well.

If the Sistema Shyam TeleServices situation turns out badly for the company, will it affect Indian investments in Russia? The situation with SSTL is indeed complicated. Despite all efforts, we are yet to receive a clear signal from the Indian side on their readiness to settle the situation in a way that would be favourable to us. Both sides are working together to try and find mutually acceptable solutions. SSTL has filed a petition with the Supreme Court, but time is running out fast: the operator’s licenses expire at the end of January. More than $3.2 billion in Russian investments is at stake here; the government has itself invested in the project through Rosimuschestvo. We cannot allow this money, public or private, to go down the drain. We have explained more than once to our Indian counterparts at various levels that we expect constructive intervention and real help. Unfortunately, no tangible progress has been made so far. Of course, Russia does not want to take the dispute to an international court, but unless the Indian authorities take effective steps, it could be a real possibility. Fortunately, there is a regulatory and legal framework for this; we’re not just talking about international trade practices here – there is also the 1994 bilateral agreement on the protection of investments. Naturally, it would be wrong to link this specific situation to the outlook for Indian investments in Russia in general. The relations between our two countries are so warm, close and prosperous that the phrase “an eye for an eye” is simply not applicable here. Plus, investment projects are carried out by different companies in different fields. Problems in one sphere should not affect the entire investment landscape. Furthermore, we are deeply convinced that such cooperation should be a two-way street. Let’s consider a purely hypothetical situation: what would have been the reaction of Indian taxpayers if, because of machinations by some Russian and foreign companies in a Russian oil and gas project, a retrospectively honest and bona fide Indian company had been placed together with rogues and

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How would you assess the general trend of Russian-Indian partnership in this year marked by the 65th anniversary of diplomatic relations between our two countries? Are there any reasons to worry given the recent minor tensions? Will we manage to overcome them and take our cooperation to new heights?

for this. We have done a good deal of groundwork in a number of areas, all of which we can offer to our partners. In particular, we are planning to expand our participation in air defence with the Igla-S portable SAM, the Tor-M2E SAM, the Pantsir-S SAM and anti-aircraft artillery system, and other Russian-developed weapons. We are also planning to take part in a tender for the supply of six diesel-electric submarines with the Amur-1650. At the present time, some new trends are gaining momentum: the emphasis on bilateral military and technical cooperation has been steadily shifting towards transferring licences for manufacturing Russian armaments in India, conducting research and development locally and setting up joint ventures. A number of very important projects are underway in this sphere, including the development of a fifth-generation jet fighter and a multi-purpose cargo plane; the production of the world’s best BrahMos super-sonic cruise missiles, T-90S tanks and Sukhoi-30MKI fighter jets. Military engineers and designers from both countries are conducting joint research and development projects in more than 40 areas. Bilateral military and technical cooperation will no doubt be discussed at the Russo-Indian summit. A number of important military contracts are expected to be signed.

its license had been revoked? I don’t think New Delhi would have been too happy about such a situation…

Russia has suffered many setbacks in military and technical cooperation. In particular, India chose Boeing in a helicopter tender. Are you concerned that India is increasingly opting for American and other technology? First of all, our military and technical cooperation with India, which accounts for 30% of Russia’s total arms exports, is unique. We have been working together for 50 years. India is the only country with which Russia has a long-time programme for military and technical cooperation, and it has recently been extended to 2020. In monetary terms, the amount of contracts signed as part of the previous ten-year programme has reached $30 billion. We expect to supply more than $7 billion of weapons and military equipment to India this year. Furthermore, we not only sell “hardware”, but also technology that no other country is prepared to provide to India at present. Many have promised, but then backpedal once it comes to real action. It is clear that with New Delhi’s new course towards diversification of arms suppliers, competition in the Indian market has been rising. Russia is ready

Will people-to-people contacts be strengthened? What about education and student exchange programmes?

AP

The second heat-up of the first unit of the 2,000-MW Kudankulam nuclear power plant in Tamil Nadu may go critical (begin the fission process) during president Vladimir Putin’s India visit for the 13th annual India-Russia summit.

I believe we can expect some progress in this area very soon. We are working on a draft agreement on the mutual recognition and equivalency of educational credentials and academic degrees. Once adopted, it will help lift serious obstacles hindering cooperation in university education. Paradoxically, many Indian citizens who graduate from Russian universities (particularly from the medical faculties) cannot find work when they return home, because their degrees are not recognised in India. As a result, young doctors are subjected to complicated and lengthy certification procedures, which often hinder their professional careers. This has been a serious problem for quite some time now, and has been raised in Parliament. So how are the two countries supposed to develop cooperation in pharmaceu-

ticals when degrees in pharmacy are not recognised? As part of the upcoming visit, both sides are also expected to sign a cultural exchanges programme for 2013– 2015. Russia will keep a keen eye on and pay particular attention to safeguarding the Roerich family’s legacy in the Himalayas and in Bangalore in the South of the country. Any thoughts, let alone suggestions, to turn part of the Roerichs’ Tataguni estate in the South into a rubbish tip or a 500-acre metropolitan waste treatment plant near it are surreal and sacrilegious.

Russia has been entertaining the idea of “returning” to Asia in recent years. Does the Russian leadership have a clear understanding of where India stands among Russia’s foreign policy priorities? What is the plan for India in the context of Russia’s developing relations with China, Pakistan and Asia-Pacific countries? Building up multi-faceted cooperation with India has always been and remains a key priority in Russia’s foreign policy. We have no other friend closer than India. This is especially important in this particular period in time, when the centre of global economic growth is rapidly shifting to the Asia-Pacific region. India’s emergence as a nascent global power and a regional power broker with its own foreign policy is becoming increasingly apparent. This is accompanied by New Delhi’s active protection of its own core interests at various international venues, helped by close cooperation with likeminded states in the UN, G20, BRICS, IBSA, SCO, SAARC, ASEM and other multi-lateral forums. New Delhi is obviously well aware of Russia’s geopolitical status as a kind of bridge between Europe and Asia. It is only natural for our country to maintain close ties with Beijing. Relations with Islamabad are also of special value for Russia and this is why we have opened a dialogue on this front as well. We are interested in strengthening contacts with all Asia-Pacific nations. But I assure you that this is not happening to the detriment of our historic and time-tested friendship with India. The nature of relations between Russia and India as a special and privileged strategic partnership, unique in world diplomacy, is the best evidence of this.


IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

O |P |I |N |I |O |N

Business Report MONDAY DECEMBER 24, 2012

POWER SHIFTS

TARGET FUTURE

BRICS: Forging new economic order, Concert of civilizations

‘Look only ahead’ – blending morality with multipolarity

VYACHESLAV NIKONOV Political Analyst placed the BRICs at the heart of global decision-making. The BRICS-G7 dialogue, despite all the caveats, has led to a slew of important decisions within the G20. Today, a key priority for the BRICS is to reform the international monetary and financial systems, primarily the IMF. “Controlling rights within the IMF lie with net creditors. The difference now is that the net creditors are all emerging markets, led by the BRICS. Their vote should not just be in proportion to their global economic weight, but more than that, because if the BRICS are not in control of how the money is spent, in future they could simply refuse to increase IMF funding,” says Russian expert Sergei Guriev. The global ascent of the BRICS is a paradigm truly unprecedented in human history: a soft rise to power unrelated to violence, war, or hegemonic struggles for global influence. We are confident that, given the strong political will of each BRIC member, deeper engagement between them could become the central element of a new system of global governance and regulation. The BRICs are rumored to have the making of a new “concert of powers,” similar to the one seen in 19th century Europe. It provided Europe with the most peaceful century in its entire history. But today’s version is less a concert of powers and more a “concert of civilizations.” Because each of the BRIC countries

DMITRY DIVIN

The collapse of the BRICS has been a hot topic recently. But when Roubini says we should exclude Russia, and O’Neill says that South Africa does not meet the membership criteria, the question relates more to the BRICS representing a kind of financial product, as originally dreamed up by Goldman Sachs. But in my view, it’s becoming stronger, not weaker. The group is increasingly emerging as an economic player: in recent years, trade inside the BRICS has grown by 28% annually to around $230 billion. The so-called “twilight” of the BRICS is based on the slowing growth seen within the four members, whose companies are disappointing international investors. But slow growth compared to what? The decade gone by was a period of economic miracle for the countries. In 2001, their total GDP amounted to approximately $3 trillion; now the figure is $13.3 trillion. That’s more than a four-fold increase. According to Jim O’Neill, the BRICS countries’ growth in the last decade is equivalent to a new Japan or Germany, or five United Kingdoms. The global economy is undergoing some major changes. Not long ago the U.S. household consumption used to account for 18% of global GDP. Now, a game-changer is happening. By the end of the decade, the BRICS will be consuming as much as American households. The G20 format has effectively

FYODOR LUKYANOV Specially for RIBR

represents a civilizational center. We’re talking about five civilizations capable of entering into a dialogue with any other. There are only two other civilizations: Western and Islamic (some might add Japanese). As such, the BRICS are the majority party in the dialogue between civilizations. In the context of development cooperation within the BRICS, an important aspect is the future use of member countries’ own currencies in the set-

tlement of accounts, mutual trade, and lending, plus the inclusion of such currencies in national foreign exchange reserves and the creation of a development bank. We continue to think of foreign investments as purely Western, but the BRICS countries, as well as the Asia-Pacific region in general, can serve as an important source of foreign investment. It would be pertinent here to think about simplifying the mutual investment procedures.

STRAIGHT TALK

Is US acting like a frog in a well? M K BHADRAKUMAR Strategic Expert

What comes to mind is the title of Vladimir Lenin’s famous 1904 work “One Step Forward, Two Steps Back: The Crisis in Our Party.” But it is more appropriate to recall the anecdote of the frog attempting to climb out of the water well; it falls back by a step for every two steps it climbs. Certainly, the US did the right thing, finally, by repealing the Cold War-era Jackson-Vanik Amendment, which curbed trade relations with Russia. It personifies an almost obligatory recognition by Washington of Russia’s integration into the world economy as manifest in its integration into the World Trade Organisation [WTO] and constitutes a self-serving step to establish permanent normal trade relations. The Barack Obama administration ad-

mits that it is necessary to remove the US’s trade barriers so that American business will be enabled to exploit all the market benefits from Russia’s WTO membership. The rough estimation is that the US could double its exports to Russia in five years if only the trade restrictions are removed. Clearly, the impetus for Washington to act is self-evident. But it has turned out to be a case of commendable two steps forward, and a regrettable one step back. While signing the new legislation passed by the Congress into law, Obama approved a package that links the normalisation of trade relations with fresh sanctions against Russian officials accused of violating human rights. The new law called Magnitsky Act prima facie blacklists Russian officials allegedly implicated in the prison

death of lawyer Sergei Magnitsky in 2009 due to several untreated health conditions while held in pre-trial jail in Moscow on fraud allegations allegedly covered up by interior ministry officials against whom he testified. The law makes it mandatory for Obama to report to the Congress on the track record of Russian officials on the human rights issues. It seems an irritant of dubious value has been deliberately injected into the overall relationship at a critical point. Interestingly, though, President Vladimir Putin has given a measured response. “The investigation (into Magnitsky’s death in jail) is not over yet, and it’s not yet clear who is right and who is wrong there, what the situation is. This is a purely political, unfriendly act. I don’t understand why. Why do they [US] need it? They talk of a reset but they themselves make the situation worse.” But, Putin added that Russia’s response should be “adequate and not excessive.” No doubt, the Magnitsky Act feeds into the already-strained ties between the

US and Russia. Russia has no lobby in Washington. Even a business lobby takes years to develop, considering that Russia is the 20th largest trading partner of the US. Despite claims of Obama’s innovative approach to Russia known as the ‘reset’, the USRussia relationship seems stuck in a time warp. What is barely hidden in all this is also that the US’s policy is ‘anti-Putin’ and ‘Russia without Putin.’ Put differently, the mantra could be ‘anything but Putin.’ No one in Washington could be nonchalant about popular support that Putin enjoys among the Russian people or that the mandate he received in the presidential election was in any way debatable. Putin’s remark on Magnitsky Act underscores that the Kremlin has zeroed in on the real problem. Thus, Russia has halted imports of US meat, which amounted to $450 million during the first nine months of the year alone. The Russians know from experience that the most delicious meat is when you get close to the bone.

Morality, “Russia’s geopolitical relevance”, the key importance of education for the country’s development, the need for economic restructuring, demographics, resisting the threat of nationalism and the importance of the turn towards the East were key subjects of Vladimir Putin’s first address to the Federal Assembly since returning as president. Putin has been pursuing a single idea since the beginning of 2012. The world is extremely dangerous and the situation will only get worse. Nobody can be an island. The external and the internal are inseparably intertwined; one feeds the other, creating a turbulent “swirl”. The Kremlin’s policy – both foreign and domestic – is aimed at minimising this turbulence and mitigating risks. In terms of foreign policy, this takes the form of attempts to counter those taken by others that, in Moscow’s opinion, are spreading chaos and knocking out the last remaining pillars from under the system of rules. That’s exactly the essence of Russia’s position on Syria: if you can’t make it better, don’t make it worse. But its capabilities are limited, because while Russia remains an influential player, it is one of many. That’s why the emphasis in the “internal-external” dichotomy, which defines national security, should be on what is under more efficient control, or more precisely – on what can be influenced. The internal stability of the state and society is a guarantee of national security. Putin’s address marks the end of the post-Soviet era. “We must look only ahead and focus only on the future.” Putin’s message instills hope that the Russian society will start abandoning useless debates about the 20th century, which have long since been idle, without creating any intellectual “added value”. He stressed on countering nationalism. It suggests that the Kremlin is well aware of where the most sensitive nerve, whose inflammation is fraught with dangerous complications, is located. It is clear to whom Putin’s words about the unacceptability of any manifestations of nationalism and chauvinism are addressed. They are addressed to Russian nationalists who are rearing their heads and to those attempting to form ethnic communities in large metropolitan areas. Russia is ceasing to be an empire with all the advantages and disadvantages of this form of government. But because of its complex composition, it cannot become an ordinary nationstate as other colonial powers did after their collapse. As a result, instead of a new identity, a future Russia risks combining the worst of both worlds. It’s simply unclear yet whether a model that allows the positive aspects of imperial and ethnic-based nationbuilding is even possible. It’s no coincidence that the leitmotif

of the address was morality – a notion that rarely voiced by Russian leaders. This also represents a break with the late Soviet and post-Soviet eras, each of which, in their own ways, distanced itself from anything ideal. During many years of reforms, social transformation was mainly perceived in purely economic terms, pragmatism was guaranteed to prevail over any kind of idealism, and an accurate mathematical model was considered more important than adequate value content. Even animated debates about “European values” had a political and even geopolitical dimension, but never a substantial one. Now, values are turning into an ideological concept, although the kind of traditionalism that is emerging right before our eyes doesn’t look like anything that could give impetus to development. That’s why Putin’s messages that “morality cannot be imposed by law” and “attempts by the government to encroach on people’s beliefs and views are a manifestation of totalitarianism … which is completely unacceptable” are extremely important. At least this is something to evoke when the most

The return of the very notion of values to the political vocabulary is progress. But Putin says morality can’t be imposed by law. zealous champions of morality from inside the State Duma start to impose the moral law once again. The return of the very notion of values to the political vocabulary is progress, compared to the arrogant cynicism that had prevailed before. Naturally, the president turned to his pet subject of demographics, reminding the audience once again that to be successful in the world, “there must be more of us and we must be better.” He considers human resources to be the true basis of sovereignty. Putin has also introduced a new notion, that of Russia’s “geopolitical relevance”, which “Russia must not only preserve, but also increase.” “It must generate demand among our neighbours and partners. I emphasise that this is in our own interest. This applies to our economy, culture, science and education, as well as to our diplomacy, particularly the ability to mobilise collective actions at the international level. Last but not least, it applies to our military might, which guarantees Russia’s security and independence.” Geopolitical relevance means the ability to build different relations with different centres of power in the multipolar world, offering them what they need. This is possible given Russia’s central geopolitical situation, although there are risks to go alongside these opportunities.

2013 OUTLOOK

Economy on an upswing, but fingers are crossed ALEXEI ZABOTKIN Economist Russia’s economy should enter a new phase in 2013 — the country begins its first full year as a member of the World Trade Organisation and has plans to step up its modernisation policies. How the New Year will play out, however, will depend largely on how the government responds to the changing demands of the global economy. At the height of the 2008 financial crisis, many observers believed Russia was destined to be trapped in a boom-bust cycle. It was not difficult to question the ability of a commodities-

based economy lacking diverse financial markets to resurrect itself for the second time in less than 10 years. Today, however, economies around the world, including those of China and the US, are either slowing down or remaining in a state of stagnation, and while Russia’s economy has also experienced a cool-down of its own since the second quarter of 2012, it has done so in the most orderly fashion. Russia learned many lessons from 1998, and put into place the right instruments and policies to prevent another crash

of the same scale. The Russian Central Bank established a more robust monetary policy, which allowed for exchange rate flexibility. To combat the 2008 crisis, the bank induced significant stress tests for domestic liquidity conditions. Starting from 2010, the bank demonstrated an increasing level of latitude toward the scale of currency fluctuations, so even if external economic conditions worsen sharply, as some analysts fear may happen in 2013, the depreciation of the ruble would act as a buffer to the real variables. And while some of this shock, were it to happen, will still be felt in Russia (especially since 75% of the country’s exports are commodities), the consequences for the economy as a whole would be much milder. Russia’s G.D.P. for 2013 is currently expected to be in the range of 2–2.5%.

Inflation, which inched higher early in 2012, has showed some signs in recent weeks of rolling over yet again. If this is the case, then the Russian Central Bank could consider easing monetary policy in the spring, or even earlier.

By 2013-end, economic growth would most likely have expanded to 3.5-4%. Can Russia attain even higher rate of growth? Such easing would be possible even as the Central Bank strives to bring Consumer Price Index inflation down to 5–6% range. By the end of 2013, economic growth would most likely have expanded to 3.5–4%, which is widely seen by analysts as the proper

estimate for Russia’s current long-term growth potential. The crucial question is whether Russia is capable of attaining an even higher growth rate. Russia’s economy grew by over 7% a year for nearly a decade. As of October, Russia’s national unemployment rate stood at 5.3%, a post-Soviet record. Therefore, superior growth outlook for Russia can rely significantly on an increase in productivity by Russia’s relatively strong employment level. This has been one of President Vladimir Putin’s key arguments since taking charge in May. However, an increase in productivity growth will require a major expansion of Russia’s capital stock. One of Putin’s first acts as president was to sign a decree to increase the investment-to-G.D.P. ratio from 20% in 2011 to 25% in 2015 and to 27% in 2018.

A radical upgrade of Russia’s investment climate is, therefore, urgently required. It is the government’s aim to deliver the first tangible results of this sentiment in 2013, which in many ways will determine the structural growth outlook and the nature of Russia’s next business cycle. In fact, the government can take credit for some notable achievements in 2012. These include the institutionalisation of the budget rule, which requires the federal budget to balance at the 10 year average of oil prices; the long-overdue creation of the Central Depository; a government decree requiring stateowned companies to pay a 25% dividend; and continued progress on the privatisation of state companies. However, until these measures are fully realised, it may seem possible, yet elusive, for a more optimistic 5–6% growth objective to remain on the other side of the proverbial dark glass.

Alexei Zabotkin is head of investment strategy at V.T.B. Capital


IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

D |E |F |E |N |C |E

Business Report MONDAY DECEMBER 24, 2012

MILITARY: Moscow set to be a dominant supplier to New Delhi despite losing a few contracts, will have to take on rivals

Russia set to score in growing Indian market with new cutting-edge hardware and weapons VIKTOR LITOVKIN RIBR

Top India-Russia military projects Vikramaditya: The Vikramaditya aircraft carrier cruiser for the Indian Navy is being refurbished at Russia’s Sevmash shipyard in Severodvinsk. The warship, whose delivery has been delayed many a times, will be handed over to India before the end of 2013. BraMos supersonic anti-ship missile: The flagship joint development project, the first ship in this series, the Teg, has already arrived at the Mumbai naval base and the second, the Tarkash, is due to arrive soon. A third ship will be delivered next year. Since the start of the project, India received more than a thousand such missiles, which are already a part of India’s coastal defences and are installed on Project 11356 frigates the Yantar shipyard in Kaliningrad has

14

billion worth military hardware Moscow plans to supply to Delhi by 2015 © RIA NOVOSTI

In November,the newspapers reported that Moscow had lost the fourth Indian tender in a row, this time to supply Il-76KMI refueling planes. The Indian Defence Ministry opted for the European A-330MRTT. Earlier the Russian multi-purpose MiG-35 fighter, the Mi-28NE helicopter gunship and the heavy transport helicopter Mi-26T2 lost tenders to the French and twice to the Americans. The fact that the heavy Mi-26T2 lost to its rival, CH-47F Chinook, was a surprise. Many remember that in 2009 an American Chinook shot down in Afghanistan was evacuated by a Russian “Mil” on its undercarriage. US President Barack Obama gave thanks to our airmen for this. And now such an embarrassment. The organisers of the tender did not say whether their choice was dictated by greater efficiency, lower price or streamlined production process or any other advantages of the rivals. There was always something which remained unsaid – which arouses suspicion that some members of the tender review commission or others were biased. That said, Russia has no complaints towards India. Our arms and weapons manufacturers cannot complain of that country’s unfairness. Just under half of the entire export figures for the Russian arms industry are attributable to the Indian army and navy. It will be recalled that several months ago Moscow handed over to the Indian Navy its Project 971 Shchuka-B K-152 nuclear submarine called Nerpa and now renamed Chakra. Indian defence plants produce the multifunctional Su-30MKI jet fighter and T-90C main battle tanks under Russian licence. And again, one cannot help recalling that not a single country with which India has military-technical cooperation has ever sold a licence for the production of military hardware supplied to India. Even AEDS who won the tender to supply 126 Rafale fighters, and in accordance with the tender

terms was obliged to offer a licence for the production of the plane at Indian plants is trying to sidestep or alter that provision. Russia’s Sevmash shipyard in Severodvinsk continues refurbishing the Vikramaditya aircraft carrier cruiser for the Indian Navy. The story of this cruiser may seem to provide the answer to why Russian arms manufacturers have recently been losing tenders to their rivals – what with the endless delays to the building of the ship which broke all the agreed schedules; the effective doubling of the cost of the contract when it was already being fulfilled; and difficulties with the ship’s boilers that were only revealed during tests last autumn. All this is really true. But it has to be said, for the sake of balance, that the Indian partners share some of the blame for the woes of the Russian shipbuilders. It was clear from the outset that such a huge and sophisticated aircraft carrier could not be refitted for $1.5 billion. And yet despite these problems and Moscow’s failure to win many recent tenders, the military and technical cooperation between Russia and India can rather be called more successful than disappointing. What we saw and heard at the 12th plenary session of the Russian-Indian Intergovernmental Commission for Military-Technical Cooperation in October sounded optimistic. It was decided that the Vikramaditya would be handed over before the end of 2013. Before the end of 2012, India and Russia intend to sign a contract for the delivery to Delhi of 42 multi-purpose Su-30MKI fighter planes. It’s not inconceivable that this may happen during President Putin’s visit to India. These contracts secured $8.5 billion for the Russian economy. Another ground-breaking project is joint production of the BraMos supersonic anti-ship missile. First Deputy General Director of the MIC NPO Mashinostroyenia (which is fulfilling the project – V.L.), Alexander Dergachev told me at the international arms exhibition Africa Aerospace and

India, Russia are expected to announce contracts for 42 Sukhoi Su-30MKI jets. Defence 2012 in Pretoria that Indian experts, inspired by the performance of the BraMos missile, want to fit it under the fuselage of the multi-purpose Su-30MKI fighter plane. He said the missile is practically ready. Besides BraMos, one may recall the fifth-generation fighter plane Russia is co-developing, and whose tactical and technical characteristics have been approved by the Indian Defence Ministry.

Add to this the joint production of RSZO Smerch rockets we have supplied to India and some other projects and it becomes clear that in spite of the Indian government’s diversification of military procurement (in line with the “don’t put all your eggs in one basket” principle) so as not to be dependent on any single supplier, Russian arms are preponderant in India today, and will be tomorrow too. However, we should

ARMS: The Defence Ministry alone plans to spend $23.1 billion in weapons and equipment

Modernising military hardware Russia’s defence industry is in for a major leap forward with focus on replacing old hardware VASILIY KASHIN RIBR

Russia’s defence industry is no longer dependent on global exports. Instead, it is now focused on catering to the growing demand for new and more efficient weapons and equipment at home. The armed forces are forever in need of better equipment, which causes frequent conflict between the military and industry over costs. Last year, the defence ministry alone placed orders worth more than $17 billion. The department accounts for 83% of all military procurement. The interior ministry, the Federal Security Service, and other law enforcement and intelligence agencies make up the

remainder. Exports, although rising, amounted to $13 billion. Last year, the Russian military purchased 21 aircraft, 82 helicopters, 30 intercontinental ballistic missiles and 8,600 vehicles. Orders continue to be placed for air-defence systems, tanks and tank-modernisation programmes. This year, the defence ministry alone plans to spend $23.1 billion on weapons and equipment. Russia is planning to increase annual defence spending from its current level of 3% of the GDP to 3.7% of the GDP in 2015, which is over $97 billion. The Strategic Rocket Forces will consume a substantial part of this money. Between 2011 and 2020, the ministry plans to upgrade 70% of its weapons

and focus on modern precision systems. Russia plans to spend about $718 billion in this project. By 2020, Russia’s troops are to receive approximately 2,000 new artillery systems, 2,300 tanks, and 17,000 vehicles. About 400 intercontinental ballistic missiles will be purchased over the coming decade. The sharp increase in procurement and military spending in the next few years is the price to be paid for the lack of spending between 1993 and 2007, when defence orders dropped off and the military squeezed everything it could from its Soviet stockpiles. Russia’s army was mostly kitted out in the 1980s and early 1990s, and the hardware is fast approaching its expiry date. “We should carry out the same powerful, all-embracing leap forward in the modernisation of the defence industry as the one carried out in the 1930s,”

© RIA NOVOSTI

Russia’s President Vladimir Putin said at an August session of the Security Council. Putin sees the sector as a new growth driver for the economy. At the same time, Russian enterprises are having trouble meeting the growing demand for certain types of equipment, such as torpedoes and light armoured vehicles, resulting in frequent wrangling between industry and the military. The latter is also unhappy with the quality of some types of weapons made in Russia, in particular certain models of small arms, unmanned aircraft and wheeled armoured personnel carriers. In some cases, Russian forces have resorted to buying weapons from abroad in limited quantities to put pressure on local manufacturers and fill gaps in inventories until the domestic industry can meet their requirements. There have been significant purchases of Austrian-made Steyr Mannlicher SSG 08 sniper rifles and Italian-made Iveco LMV M65 (Lynx) armoured cars, as well as Israeli drones. Foreign-made armoured personnel carriers and heavy-armament combat vehicles are also under consideration. Russia’s military and political leaders have no plans to expand imports of military equipment. Their main focus is to modernise a national industry. Most of the equipment now produced by Russia’s defence industry consists of radical upgrades of models first developed in the 1980s and early 1990s. For instance, the only aircraft designed from scratch in the post-Soviet era is the Yak-130 lead-in fighter trainer. The national industry is focused on very large programmes to upgrade the country’s military capability. Several new armoured vehicles are on the drawing board, along with a new tank, a self-propelled gun, a heavy infantry combat vehicle, a fifth-generation T-50 fighter, and the PAK DA strategic bomber.

30% is the Indian share of all Russian mititary exports, thus making India the single largest market.

not entertain any illusions. Breathing down our necks are persistent, active and strong rivals who have some supporters in the Indian government. Even so, we have a fair chance to score in the Indian market. New projects include air defence systems,

built, and continues to build for the Indian Navy. Nerpa nuclear submarine: Moscow has handed over to the Indian Navy its Project 971 Shchuka-B K-152 nuclear submarine called Nerpa (now renamed Chakra). Multi-purpose Su-30MKI fighter planes: The IAF has already bought more than 230 such planes from Russia. The estimated cost of the deal is $3.77 billion and deliveries are due to start in 2014-2015. Fifth-generation fighter plane: The first flight of the Multi-Role Transport Aircraft, due to replace Soviet-era An-12 and An-26 in the Indian market and even in the markets of third countries is scheduled for 20162017, with serial production to begin in 2019.

modernisation of planes and helicopters for the Indian Air Force, notably the MiG-29 fighter and Mi-17 helicopter, refitting of T-72 and T-90S tanks which are the strike force of the Indian army, along with many other projects. There is still a chance to win the tender to supply 197 reconnaissance and observation helicopters to India, for which the Italians and Americans are also bidding. But our position is strong enough because we are offering our light Ka-226T helicopter which made a good showing in the Indian mountains. Russia’s former ambassador to India Vyacheslav Trubnikov is confident that Moscow would supply $14 billion worth of military hardware to Delhi by 2015. But leaving aside starry-eyed optimism one has to admit that if we are to score new victories in tenders to supply to India new types of military hardware and weapons we must overhaul our defence industry. That work has already started. Much hinges on its success.

Setting stage for anti-missile shield Russia to launch two plants in 2014 to produce S-400 ‘Triumph’ and S-500 ‘Prometheus’ ANDREI KISLYAKOV RIBR

Come 2014, and Russia will launch two major plants producing hypersonic missiles, 77N6-N and 77N6-N1, for its state-of-the-art anti-missile defence systems, S-400 “Triumph” and S-500 “Prometheus”. The ministry of defence has officially announced that “with those missiles, surface-to-air missile systems will be able to bring down any target flying at a speed of up to 7 km per second, including nuclear warheads of ballistic missiles”. The S-500 system has yet to be completed, while its S-400 predecessor can currently launch older missiles, the 48N6 and 9M96. The 77N6-N and 77N6-N1 models will be the first Russian missiles with inert warheads, which can destroy nuclear warheads by force of impact, i.e., by hitting them with precision at great speed. No explosives are needed: engineers’ estimates show that a collision at a speed of 7km/s would be sure to destroy just about any flying object. The new plants are vital for the development of an anti-missile shield above Russia, since new surface-toair systems are already entering service but are not equipped with new missiles. For now, the “Triumphs” (S-400) are complete with missiles that have been left over from the old S-300 systems. Their range is around 200 km, whereas the S-400s are designed to intercept targets at a distance of 400 km. The absence of more advanced missiles stands in the way of fully equipping Russia’s Air Forces and Aerospace Defence Forces with the S-400 systems. Only seven divisions have been supplied with such systems since 2007, with another 49 waiting to receive them.

“The last S-300 was produced for the Russian army in 1994 or so,” says Igor Ashurbeili, co-chairman of a non-departmental expert council on aerospace defence and former chief designer at Russian defence company Almaz-Antey. “One of the problems faced by the Russian defence industry is that it “stopped accepting orders for the S-300s, but hasn’t started to take orders for the S-400s yet,” says he. The design of S-400 missiles has not been completed either. The system should be fully compatible with short-, medium- and long-range missiles. The long-range missiles are non-existent, even though such a missile would be a serious hindrance to potential enemy vehicles, includ-

The Triumphs, with 200 km range, are complete with missiles. The S-400s are designed to intercept targets at range of 400 km. ing Airborne Warning and Control Systems. Without these missiles, the S-400 cannot fulfil its purpose – engaging targets at a long range. As for the future S-500 system, “it will be an S-400, but with longrange missiles,” says Aleksandr Khramchikhin, deputy director of the Institute for Political and Military Analysis. “The S-500s will at best be created in 2020, no earlier. At present, and for the next 10 years, the chances of countering a massive NATO attack are very low: it takes a long time to recharge the S-300s, so in the best case they will only repel the first wave of an assault, which would be 100 to 200 targets.”


IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

S |P |A |C |E

Business Report MONDAY DECEMBER 24, 2012

VOYAGE: Russian instruments fitted on American rovers are making new discoveries

Mars Mission in full swing

New pacts to launch ties into higher orbit

The quest for life on the Red Planet and water on the Moon has created a new global compact.

Putin’s visit likley to see new joint projects that will bolster India’s ambitious space plans

ANDREI KISLYAKOV

RAJEEV SHARMA

RIBR

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he Red Planet has brought several nations together, spawning a unique model of trans-national cooperation. Russian instruments installed on American rovers are already looking for traces of life on Mars and water on the Moon. In late November, the European Space Agency Council approved a draft agreement with Roscosmos on the ExoMars mission to the Red Planet. “Work on the project is ongoing,” said ESA spokesman Franco Bonacina. “The signing of this agreement means that the European side is ready to sign the main document.” Under the draft agreement, European specialists will create a TGO (Trace Gas Orbiter). One of the TGO’s main tasks after its projected 2018 launch will be to investigate gases that are present in low concentrations in the Martian atmosphere. Europeans will develop an Entry, Descent and Landing Demonstrator Module (EDM), while Russian scientists will create scientific instruments for the orbiter. Russia will also provide a Proton-M launcher and the Baikonur Cosmodrome, from which the orbiter will be launched. If everything goes according to plan, a Proton carrying the Martian orbiter could blast off in 2016. “The surface of Mars is covered with dust brought by global dust storms,” Yuri Zaitsev, Russian Academy of Sciences Space Research Institute spokesperson, said in an exclusive interview with RBTH. “The Russian instrument DAN, developed by the Space Research Institute’s Laboratory is mounted onboard the American rover. It emits powerful neutron impulses that will ‘X-ray’ Mars upto a depth of 1 meter (3.3 feet).” Researches will use its neutronography’ data to evaluate water content in the matter under the rover’s wheels and to explore the most promising areas with high water content in minerals. It is such areas that are particularly interesting in terms of looking for signs of life.” But Mars is not the only destination… Launched in the fall of 2009, the American Lunar Reconnaissance Orbiter (LRO) recently confirmed the

n the area of space, new joint projects are expected to be unveiled during President Vladimir Putin’s visit to India. In October, Deputy Prime Minister Dmitry Rogozin announced Russia’s willingness to offer India joint participation in development of its GLONASS system on an equal basis. This was the first time when Russia made such an offer to India. The expanding India-Russia space cooperation comes at a time when India is set to invest almost $3 billion for the next five years. The Indian Space Research Organisation (ISRO) plans to launch its first manned space flight in 2017. India is also eyeing deep space missions to be topped by lunar human landing, possibly by 2020. India’s space budget would be enormous by 2020. The maiden manned space flight of India would ensure that India has an edge over several developed countries. The ISRO’s ambitious programmes include the setting up of several ground facilities like launch pads, the mission control centre, astronaut training centre, all permanent assets on the ground including what goes into the orbit. India and Russia have collaborated on technologies in the space sector, which can integrate into platforms that India is developing. India could not have made such

Setting agenda for the next 30 years Roskosmos , Russia’s space agency, has an ambitious multi-layered strategy for the near future, which includes the construction of a new cosmodrome in eastern Russia and a base on the moon.

Roskosmos marked a milestone in 2011 with the completion of the Glonass navigational satellite system — Russia’s answer to GPS, which relies on US satellites.

existence of water on the Moon. Once again, it was a Russian instrument – the LEND, short for Lunar Exploration Neutron Detector – that was credited with the discovery. “The Moon’s poles have craters where water is condensed. It’s not water or ice as we know it; it’s more like wet sand, from which water needs to be recovered,”

In 2011, the construction began on a new cosmodrome in the Amur Region, which should allow Roskosmos to move launches out of Kazakhstan into Russia by 2015.

Roskosmos’ most ambitious nearterm goal is the establishment of a permanent base on the surface of the moon. The agency hopes to fulfill this mission by 2030.

say the institute’s scientists Maksim Mokrousov and Anton Sanin, who created the instrument. “We have found upto 10 percent of water in the Moon’s soil, and evaporating it from there will not be a problem,” says Mokrousov. “Why are we doing this? This is necessary for exploration of Mars, which is more like Earth.”

“We cannot live on the Moon, which is four days away, because it’s too harsh an environment,” he said. “But it will become a testing ground for flights to Mars.” Looking ahead, a large-scale Russian-European Moon exploration project with the Luna-Resurs and Luna-Glob orbiters is scheduled to start in three months.

NEW FRONTIERS: Come 2015, and you can fly to low-earth orbit, moon, deep space

Holiday idea: Buy a ticket to the Moon! RAKESH KRISHNAN SIMHA RIBR

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ot $155 million in spare cash? It could buy you a ticket to the moon and back -- and a special place in history. However, if the moon is beyond your budget, there’s a trip to low-earth orbit that costs just $150,000. That will be enough to get you your astronaut – or cosmonaut – badge. Starting as early as 2015, space tourists may be able to pay their way to the moon on board Russian spacecraft retrofitted by a company based in the Isle of Man. Space start-up Excalibur Almaz has acquired two 29,000 kg space stations built in the 1970s for the Soviet Union’s Salyut space station programme and four three-person reusable re-entry vehicles (RRVs) built for Moscow’s secret Almaz military reconnaissance platforms. The Salyuts are the same spacecraft that formed the core of the legendary Mir space station and now provide a base for Russian crews aboard the International Space Station. Excalibur Almaz is currently refurbishing the spacecraft to get them ready for their first flights. While the Almaz capsules will be launched by Russia’s Soyuz-FG rocket, the Salyut class space station will ride atop a Proton rocket – both from the Baikonaur cosmodrome in Kazakhstan. However, there won’t be any Apollo-style landings – it would be forbiddingly expensive, and too high-

tech a venture for a private company as yet. Instead, there will be a fly-past of the moon. “We are planning flights to low earth orbit, the moon and deep space as early as 2015,” Rob Lazaro, PR director, Excalibur Almaz, told RIBR. “The length of flights will depend on the mission and destinations, varying from a few days to months.” A unique feature of the Almaz RRV, which is designed to carry a crew of upto three, or a combination of crew and cargo, includes the largest window ever developed for a spacecraft, boasting over two metres of panoramic views of the Earth and stars. “We are confident our systems and missions will be safe and will take the utmost care to ensure proper training of our passengers to further ensure safety and mission success,” says Lazaro. However, the actual number of space tourists is quite small, with people deterred not only by the costs but also the risks involved. Lazaro says Excalibur Almaz will tailor space missions to bring in governments and academic institutions that don’t have access to space launch services. The RRVs, which are being modernised, have been used nine times and were built for at least 15 missions, which means they are good for another six flights. “Our hardware and spacecraft have been to space and back safely over nine missions as well as undergoing multiple ground tests,” says Lazaro. “We are confident our systems

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Excalibur Almaz is retrofitting a Russian-made spacecraft to take you on your fantasy voyage

Space tourism, which is now targeted at the space set, is set to become affordable in the not-too-distant future.

Russia’s impeccable safety record Russia’s space programme has an impeccable safety record. While the American Space Shuttle killed more people – 13 astronauts and a teacher – than any other space vehicle in history, “Russia is now seen as having the world’s safest, most cost-effective human spaceflight system,” says MSNBC. Unlike the extravagant Space Shuttle programme – which National Aeronautics Space Administration (NASA) chief Michael Griffin said was a mistake and “inherently flawed” – Russian spacecraft have done their job efficiently and affordably. The average cost of a Space Shuttle launch was $1.5 billion, whereas the workhorse Russian rocket, the Soyuz, costs between $45 million and $80 million per launch. Pointing to the irony, Forbes magazine said, “This makes the Soyuz both the most capitalist and the least government-funded space transportation option.”

and missions will be safe and will take the utmost care to ensure the proper training of our passengers to further ensure safety and mission success.” Russia’s Energiya Corporation pioneered space tourism in 2001 when Dennis Tito of the US became the first space tourist on a Soyuz TM-32 spacecraft. He paid $20 million for an eight-day ride on the ISS. Private space flights are, however, expensive and not for everyone. Indeed, it is the jet set – like Ashton Kutcher, who has booked a flight on Virgin Galactic for $200,000 – that the space tourism companies are after. Also, for that price, all that tourists will get is a few minutes of zero-G, where the spacecraft merely skims the edge of space. Tourists expecting a Space Shuttlelike experience are likely to be disappointed. However, with proven space hardware sourced from Russia, Excalibur Almaz may offer a more generous experience. Others in the space tourism business, such as Space Adventures and Virgin Galactic, will then be forced to offer a better ride. Costs are bound to fall back to earth once the market develops critical mass.

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deep forays into space without the Russian cooperation. It was the erstwhile Soviet Union that had launched first Indian satellites - Aryabhatta and Bhaskara from its Baikonur cosmodrome – in the seventies and eighties. Rakesh Sharma, the first Indian astronaut, travelled to the Soviet Salyut-7 space station in 1984. The Indian space programme has seamlessly moved beyond practical applications-based thrust to deeper and technologically far more difficult newer areas like India’s first lunar mission (Chandrayaan-1), navigation and joint ventures in space science. India and Russia actively participate in many fields of exploration and peaceful uses of outer space. They have many operational agreements in moon exploration, global navigation system, human space flight and spacecraft building for atmospheric studies.

COMMENT

Deadline 2017: Get ready for lunar bases IGOR MITROFANOV RUSSIAN ACADEMY OF SCIENCES The moon is our immediate target in space. I believe its development will start in the 21st century. There will be lunar bases just the way we have bases in Antarctica. We used to have two rovers on the moon, and we brought back soil from there. Luna-Glob is expected to land on the moon in 2015; the orbit will be explored in 2016; and the heavier orbiter Luna-Resurs is scheduled to land near the southern pole of the moon in 2017. We are developing a workhorse to study and explore the moon. Soil will be delivered from the pole to compare it with the samples brought from the middle latitudes in the last century. We are examining the feasibility of taking the soil from about

two metres without losing volatile substances. We may even find water there. The Moon Test Ground project — a robotic deployed base — is our plan for the future. The first projects cost around $330 million. This is a small change! We also need to remember that this money doesn’t fly to the moon, but stays here as it creates infrastructure, jobs and new materials. I believe it would be right if the station on the southern pole of the moon became the next international project after the ISS. Then, it won’t matter who will be the first to step on the moon. (Igor Mitrofanov is with Space Exploration Institute of the R.A.S)

ISS: Past perfect, future uncertain The ISS was launched 14 years ago, but it changed priorities of its principal operators FYODOR KISLOV RIBR

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he International Space Station (ISS) has been in orbit for just over 5,000 days. More than 200 individuals from 15 countries have been to the station since 1998, when the station’s first module was launched. “The experience we had with the first Salyut was utilised when the Mir station was built. This core module has become the prototype of what would eventually become the ISS,” says Sergei Krikalyov, head of the Yury Gagarin Cosmonaut Training Centre outside Moscow. When that project started, both the Russians and Americans knew how to cooperate, how our equipment worked together, and even how all of us would rest together,” recalls US astronaut Michael Barratt. But this bonhomie is now more like nostalgia. Today, despite the crash of a Progress freighter spacecraft last year, the ISS programme continues. But as the NASA moves its focus to deeper space, the

US has little motivation to continue its cooperation with Russia. According to the NASA operations programme published on July 5, 2011, the low Earth orbit in which the ISS is currently operating will be reserved for private companies, which might bring tourists or carry out research. The US does not seem particularly concerned about the future of the ISS. For Russia, however, the ISS remains an important factor in the development of the manned space exploration. In May 2011, the head of the Central Research Institute of Machine Building, Gennady Raikunov, said that the ISS is a closed chapter for Russia, and that the future of science lies with exploration of the moon. “We are thinking about using our natural satellite – the moon – as a satellite, where we could set up many more experiments and make use of far more opportunities,” says Raikunov. The ISS will continue its orbital work until 2020, at the very least, he asserts. The ISS is expected to continue its orbital work until atleast 2020. Its future, however, remains uncertain.


IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

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Business Report MONDAY DECEMBER 24, 2012

A festive reading of Russian books

HERITAGE: Roerich’s memoirs from his travel experiences across India reveal empathy and a sense of belonging

Savour translated classics to post-modern forays, from travelogues to coffee-table tomes. PHOEBE TAPLIN RIBR

Horseman”, or the short tragedy of “Mozart and Salieri” that inspired Peter Shaffer’s “Amadeus”.

Some super stocking-fillers are also available from Alma Classics, an elegant series of rebranded masterpieces from authors around the

world. Their list includes stories by Chekhov and poems by Pushkin, Bulgakov’s novellas and Dostoevsky’s journalism. Two recent additions are short novels by Ivan Turgenev, “Faust” and“Rudin” (Alma Classics, 2012). Hemmingway called Turgenev “the greatest writer there ever was” and certainly these tales show a masterful control of character and emotion. “Faust” is a novella in letters about the relationship between a married woman who has been protected from fiction and poetry all her life and the man who finally introduces her to the joys and perils of literature. “Rudin”, Turgenev’s little-known first novel written in 1856, also centers on a typically drifting “superfluous man” and his doomed relationship with the daughter of his aristocratic hostess.

Another “lost treasure”, this time from the embattled ranks of Soviet modernism, is Sigizmund Krzhizhanovsky’s “The Letter Killers Club” (NYRB, 2012). The surrealism of this short novel about a mysterious circle of intellectuals, who tell each other stories that they have decided never to write down, is a response to life in Stalin’s Moscow. Like the pilgrims in Chaucer’s Canterbury Tales, each member of the group tells a story. The range of styles, from folk fable to apocalyptic sci-fi to Roman myth is deliciously bewildering. In one story, a scientist works to disconnect individual human wills from their bodies and replace them with impulses from an (prophetically wireless) “ethical machine.” Another tale centres on a multitasking friar-cum-jester whose cas-

sock is stolen. With an evocative use of language, the author celebrates the multiplicity of experiences in the “polyglot, patchwork world”.

Eduard Kochergin’s award-winning memoir “Christened with Crosses” (Glagoslav, 2012) tells the story of his epic escape from the brutal life of a political orphan in Siberia and return

to his native St Petersburg, where he is now a successful set designer. Kochergin’s parents were imprisoned as “enemies of the people”. During his Russian odyssey, travelling thousands of miles home, he works as a fire-stoker, tattoo-artist, maker of playing-cards, or even a thief. Part of Kochergin’s skill is to make his carefully-crafted memoir seem artless and wandering. Despite the horrors he sees, the author retains his humanity in a world which tyranny and war have rendered almost uninhabitable. From the brotherly love of the blind singer, Mitka, to a tyrannical choir-master in a Vologda orphanage, each encounter adds to Kochergin’s tale. Towards the end, he finds himself tattooing Stalin’s face onto the chest of an Estonian gangster called “Tolya the Wolf”, all in a day’s work for “a thief, an inmate, a runaway, a hobo”.

ITAR-TASS

A charming, pocket-sized retranslation of Alexander Pushkin’s “The Queen of Spades” (Pushkin Press, November 2012) is hot off the press this month. This mini-treasure-house selection includes plays and verses alongside the classic tale of gambling and madness, creating an ideal introduction to the famous poet’s work. “The Stationmaster” also appears in full, a moving short story about a flirtatious girl in a lonely postal station, who is carried off by a handsome hussar on a troika. Poetry is notoriously hard to translate, but here Pushkin’s poems find an accessible context with Pushkin’s verse-narrative about the founding of St Petersburg, “The Bronze

From Benares to Mumbai: Soul of India shines in Roerich’s eyes ALEXANDER KORABLINOV RIBR

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efore going on his famous Altai-Himalaya expedition, Nicholas Roerich travelled across India and the country’s contrasts and diversity left indelible impressions on his mind. “A thin shore line. Meagre little trees. Crevices of desiccated soil. So does India hide its face from the South. And the black Dravidians as yet do not remind us of the Vedas and Mahabharata.” Already well-versed in Hindu and Buddhist texts, Roerich along with his family and expedition, arrived in the British India in 1924, a time when the struggle for independence was gathering momentum. Roerich moved on to Madura (now Madurai) and then travelled to India’s east coast and several other parts of the country, including Mumbai and Jaipur. His accounts of many parts of the country 88 years ago seem all too familiar for Indians living in presentday India. His exploratory spirit took him to the areas east of Grant Road station; a part of the country’s financial capital that still maintains notoriety. “In the special streets of Mumbai, behind bars, sit the women prostitutes. In this living merchandise, which clings close to the bars, in these outstretched hands, in their calls, is contained the whole terror of bodily desecration.” Not all of Roerich’s impressions of

Mumbai were as disturbing. He found good humour in seeing cows waiting outside the door when he left the office of the Chartered Bank of India. Like many contemporary travellers to India, Roerich was enamoured by the royal city of Jaipur, where he admired the Jantar Mantar astrological observatory and the sight of Rajput princesses. “And along with this is a fantastic and romantic fragment of old Rajputana - Amber where the princesses looked down from their balconies upon the tournaments of their suitors; where every gate, every little door, astonishes one by the correlations of its beauty.” Roerich visited Fatehpur Sikri, the capital built by India’s great emperor Akbar, who the Russian sage greatly admired and called the “great Unifier of his country”. “Akbar knew how the well-being, which he bestowed on his people would be pillaged. Perhaps, he already knew how the last Emperor of India would live to the middle of the 19th century, peddling the furniture of his palace and chipping from the walls of his palace in Delhi the fragments of mosaics.” Roerich was also fascinated by the traditions in Benares (Varanasi). Roerich observed the sadhus, yogis and religious pilgrims by the river. “A woman quickly telling her rhythms performs her morning pranayama on the shore. In the evening, she may again be there, sending upon the

Nicholas Roerich was an admirer of Rabindranath Tagore and Jagdish Bose, calling them the “noble images of India”. The best and worst of Roerich’s India still live on in the country’s cities and countryside. stream of the sacred river a garland of lights as prayers for the welfare of her children.” He called the garlands “prayer-inspired fireflies of the woman’s soul.” It would take years before Roerich wrote the book Agni Yoga, but his impressions on the tour of the Indian plains helped mould his views on yoga. “We recall these Yogis who sent into space their thoughts, thus constructing the coming evolution... they are bringing our thought near to the energy, which will be revealed by scientists in the very near future.” While Roerich’s thoughts were set on the Himalayas, his memoirs of his time in the rest of India reveal a great degree of empathy and almost a sense of belonging to the vast plains that were protected by

the great mountains. He fretted that the basis of worship was forgotten in Hindu temples and degraded into superstition. He aspired for an India that would preserve its ancient knowledge yet shun superstition and move towards modernity, on the lines of Swami Vivekananda’s teachings. “Vivekananda was not merely an industrious ‘Swami’- something lion-like rings in his letters. How he is needed now!” Roerich was an admirer of Rabindranath Tagore and Jagdish Bose, calling them the “noble images of India.” Speaking of Bose, Roerich said “the scientist approaches wholesomely all the manifestations of life. He values highly (Russian botanist Kliment) Timiryaseff’s review of his works.” Critical of dogmatic customs and superstitions like animal sacrifice and caste-based discrimination, a love of India and its people, however, shines through in Roerich’s writings. “The frescoes of Ajanta, the powerful Trimurthi of Elephanta, and the gigantic stupa in Sarnath, all speak of ancient times. And this former beauty also glimmers in the fine and slender silhouette of a woman who carries her eternal water; water which feeds the earth.” Despite the many visible changes in the last two decades, the best and worst of Roerich’s India still live on in the country’s cities and countryside.

LANGUAGE: Focus on updating teaching methods and latest books in India

How to master cadences of Russian AJAY KAMALAKARAN RIBR

In pursuit of global soft power, Russia has embarked on a multi-faceted exercise to promote its rich and complicated language. Over the last few years, the Russian government through the Russkiy Mir Foundation has woken up to the importance of disseminating the language. “The Russian language not only preserves an entire layer of truly global achievements, but is also the living space for the many millions of people in the Russian-speaking world, a community that goes far beyond Russia itself,” President Vladimir Putin told the Russian Federal Assembly in 2007. While India does not have a large number of Russian speakers, the warmth with which Russia is viewed in the country makes it an ideal destination to spread the language of Pushkin and Tolstoy. The Russkiy Mir Foundation, which has a development programme for spreading Russian language teaching overseas, has been at the forefront of initiatives directed

Time to adapt to Internet-era techniques Russian has been taught at the university level in India since 1946, when Delhi University first took the initiative. Indian interest in the language peaked in the heydays of Indo-Soviet bonhomie but waned for a while. Instructors at various levels have argued that many universities in India use outdated teaching methods. The Mumbai conference sought to address the pressing needs of Russian language professors in India. Universities in Russia

at India. In the last week of November, the Russian Centre for Science and Culture in Mumbai hosted a seminar on the challenges and problems of teaching Russian as a foreign language. Professors from the Lev Tolstoy Tula State Pedagogical University discussed various methodologies of teaching the Russian language in countries which are not known for a strong Russian heritage. Instructors from various parts of

have been quick to adapt teaching methodologies for the Internet generation and called on Indian professors to do the same. “The distance mode of learning through the Internet will be useful to teachers in keeping abreast of changes that are taking place in our field, as also in Russian society, life and the entire system as a whole,” said Dr Chetan Thakar, who teaches Russian at the University of Pune’s Department of Foreign Languages.

western India such as Ujjain, Kolhapur and Pune attended the conference. Professor G. V. Tokarev focused on cultural aspects and peculiarities of the language. “Russians are ready to forgive mistakes in declensions, in mixing up the cases, but not errors in the cultural context,” he said. “If a foreigner hears someone calling his boss Alyosha or Alyokha at the office and decides to do the same without an in-

formal relationship, we all know what can happen,” he said. The seven-member delegation from Tula presented the Indian professors with new books on various methods of teaching the Russian language and Russian literature. A common complaint among the teaching community in India is that most books are entirely in the Russian language and have no English explanations for students with limited proficiency. “Russian language books would be more useful to Indian students if there were explanations in English,” said Vladimir Dementiev, director of the Russian centre in Mumbai. The professors from Tula said that plans were on to publish more books with explanations in foreign languages. Professor Abramova, who read the famous Russian fairy tale ‘Three Bears’ with the help of visuals, brought a whiff of Russia to the audience by dressing in the traditional costume of the Tula Region. Indian students were advised to follow the Tula-based university’s developments for information on various competitions and research possibilities.

Mikhail Shishkin’s experimental epic,“Maidenhair” (Open Letter Books, 2012) is a more challenging read, but would be an excellent choice for anyone interested in contemporary literature. Many people say Shishkin is Russia’s greatest living novelist. He was the first Russian writer to win all three major literary awards. His work is rich and complex; his style is uniquely textured and allusive. His novels are now finally becoming available in English. Shishkin said in a recent speech at Oxford University that an author is “a link between two worlds”. The hero of “Maidenhair” is – as Shishkin himself was – an interpreter for the Swiss immigration authorities, also an interface between realities.


IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA

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Business Report MONDAY DECEMBER 24, 2012

FESTIVITY: Gifts from Grandfather Frost, fireworks, ski races, midnight toasts, watching comedy on TV, Hindi movies

Celebrating with friends and family: Ring in the New Year, be merry and enjoy the snow In Russia, it’s bliss to be alive and soaking in good times during the holiday season. gone easy on the bubbly the night before. Another essential part of the celebrations is watching the Soviet-era comedy Ironiya sudby, ili S lyogkim parom (The Irony of Fate or Enjoy Your Bath), a romantic comedy directed by Eldar Ryazanov. The uniquely Russian plot has a Muscovite landing up in drunken state in an apartment with a similar address and layout in Leningrad, after being put on a flight by his equally drunk friends. This is the quintessential Russian feel-good film and is still very popular in many parts of the former Soviet Union. Some regional television stations also broadcast old Hindi films during the holidays, with Raj Kapoor’s Bobby still being a favourite among an older generation.

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sk anyone from Kaliningrad to Vladivostok in the first week of December about what’s on his or her mind. Well, no great mystery here: the answer will most likely be the much longed-for New Year holidays. There is nothing Russians love like a good celebration, with the country even earmarking a special holiday for each profession, but the mother of all holidays is the New Year. Essentially, the New Year has the same value in Russia that Christmas has in the Christian world. It’s the time for goodwill and presents. Russian children write down their gift requests in a letter to Ded Moroz (Grandfather Frost), who like Santa Claus wears a red suit. Unlike his western counterpart, Ded Moroz is accompanied by Snegurochka (Snow Maiden), who is usually a very beautiful woman. New Year in Russia is traditionally an occasion to soak in the good times with family, when bottles of Soviet champagne are downed, even before the clock strikes midnight. While many young people are shunning the tradition and heading off to warmer places like Thailand, most Russians still cannot fathom the thought of ringing in the New Year under palm trees. Snow is an essential part of the Russian New Year and many towns across the country organise crosscountry ski races on New Year’s Day. Of course, the participants would have

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It’s not business as usual in Russia on January 2. The holidays continue officially until after the Orthodox Christmas (January 7). Seeta aur Geeta is also popular. When the clock strikes midnight in each of Russia’s regions that stretch from the Scandinavian border all the way to the Bering Strait, revellers watch a telecast of greetings by the president who addresses each region separately. This is followed by the first toast of the New Year and several rounds of fire-

works. The party lasts the entire night and carries on over the following week. Unlike in many parts of the world, it’s not business as usual in Russia on January 2. The holidays continue officially until after the Orthodox Christmas (January 7) and most businesses open around January 10. It’s a violation of the Russian Labour Code to make employees work during the official New Year Holidays without paying hefty holiday wages. The casual attitude of many towards work continues

SPORT: Russian women have a major presence in the WTA rankings

Betting on woman power All eyes are on Australian Open when Russian women tennis players are expected to score big NICOLA SELLITTI

The Russian Tennis Federation has endured a year, marked by more lows than highs. Russian women players produced acceptable performances, but their male counterparts struggled and will have much to prove when the Australian Open begins on January 14. The Russian men’s team, in throes of its biggest crisis in 20 years, is hoping the tournament will mark its comeback. The Russian men recorded their latest loss at the hands of Brazil in the Davis Cup. Following the 5-0 defeat, they were relegated to the zone group. Captain Shamil Tarpishchev’s team comprised Alex Bogomolov Jr., Igor Andreev, Teimuraz Gabashvili and Stanislav Vovk - all good players but none appearing destined to be stars of the game. The Russian team has only four players among the top 100 in world rankings, and only two in the top 50. Russia’s best hopes in Melbourne are Nikolai Davydenko, a player nearing the end of his career, and Mikhail Youzhny, seen as being one of Russia’s purest tennis talents who has never become a champion. It will be upto the Russian women to uphold the country’s honour in Australia. With 10 players ranked in-

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side the top 100, and about 40 inside the top 500, Russian women have a major presence in the WTA rankings. But numbers do not always reflect quality. With the exception of Maria Sharapova, Russian women performed disappointingly at the grand slam tournaments this year. Sharapova at 25 is in her prime and remains Russia’s brightest hope at The Open, although there is always the chance

Which off-beat Russian destination will you visit next? Tell us where you’re going during the holidays.

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she will come up against her long-time rival Serena Williams, who defeated her at Wimbledon and at the London Olympic Games. She played in two grand slam finals this year, winning at Roland Garros, and she reached the semi-finals of the US Open. Winning the Australian Open could be the beginning of a new chapter in the story of Sharapova’s tennis career, a victory that would underline her maturity as a player. Another player to watch is Maria Kirilenko. Although better known as the girlfriend of Russian ice-hockey superstar Alexander Ovechkin, Kirilenko enjoyed a fine season this year. She narrowly missed out on a bronze medal at the London Olympics; she lost to Sharapova in straight sets in the semifinal, and then to Belorussian Viktoria Azarenka in the bronze-medal match. Nadia Petrova is another Russian hopeful at the Australian Open. She is ranked inside the top 20, but going by her past performance, she is unlikely to make the grade. While two other well-known players, Vera Zvonareva and Svetlana Kuznetsova, are suffering from injuries, there is depth in the women’s contingent. This may be the year for Anastasia Pavlyuchenkova. At 21, she is talented and powerful, was ranked 13 in 2011, but fell to 35 after a disappointing 2012. Meanwhile, the Australian Open has given itself a boost to make it as attractive a destination as the French Open, Wimbledon and the US Open by increasing its prize money by 15 per cent to a record $31 million, thus making it the richest tennis tournament in the world. The $4 million increase in prize money is the biggest single increase in the history of the event. Every player will receive more money, including those who exit in the first few rounds.

right on till January 14 (The Orthodox New Year), all of this leading to an annual fall in industrial productivity in the country. The long break is a wonderful time to meet and greet loved ones and enjoy the delights of the fabled Russian winter like ice skating and picnics in the snowy woods. It’s also a nice time to be in Moscow since the city feels peaceful and abandoned since a large section of the elite fly south to warmer environs like migratory birds.

It’s hard to believe it, but in the midst of all this public celebration and revelry, utilities and public health services function across the country. Hats off to the unsung heroes in the country who work during the holidays! These include hospital staff, police, employees of utility providers and those working for the emergencies ministry.

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Lunch: A window to the heart, soul and mind of Russians Russian cuisine is a tapestry of diverse influences - a typical lunch platter will include borsch, pelmeni and three glasses of vodka. DMITRY BLINOV RIBR

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orsch, pelmeni and three glasses of vodka: these are not just stereotypes but actually treasures, which represent the soul and character of the nation of Tolstoy and Dostoevsky. Russian cuisine is a tapestry of EasternEuropean, Caucasian, Middle Eastern and even Chinese influences, thus making it an integral part of national identity. Many foreigners criticise Russian food for being too bland, that is, until they try Moscow mustard, which is so hot it could bring a repentant tear to your eye. Let’s have a look at a typical Russian lunch: traditionally, it is quite a hearty meal in the middle of the day. First of all, there is borsch, widely considered to be the king of Russian soups. Apart from beetroot, other essential ingredients for borsch include cabbage, potato, onion, carrot and any kind of acidifier so that the beetroot doesn’t lose its colour as it is being cooked. This complicated, beautiful and filling soup is normally made with meat (beef, poultry or pork), bone, and meat or vegetable stock. Its ingredients also include acidifiers such as tomatoes, apples, prunes, lemons, regular vinegar or wine vinegar, or specially made beetroot kvass (a rather mild kind of vegetable vinegar). As for spices, there are up to two dozen different varieties. Vegetarian borsch, which first became popular during the Soviet Union as meat was often unavailable, is nowadays a common healthy alternative. The starter is followed by the main

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AJAY KAMALAKARAN

Borsch is one of the dishes that makes full use of beetroot. course, or as ordinary Russian families say, “the hot dish”. As the nation’s most popular meat dish, we have chosen pelmeni, which came to Russia from China, thanks to the Finno-Ugric people who lived on Russian land. In Komi, pel’ nyan’ means “bread ear”: these boiled dumplings, made of thin dough and filled with meat or fish, are indeed roughly shaped like ears. So what exactly makes pelmeni typical of Russian identity? Firstly, a compulsory step when making pelmeni the Siberian way is to deep-freeze them – if not in a Yakutsk outdoor temperature of -40, then a simple freezer works just as well. Freezing the pelmeni beforehand gives the filling a distinctively dry yet succulent quality. Well, it’s vodka time now - what

Russian celebration would be complete without the vodka! Of course, moderation is the key: a glass as an aperitif, a glass with the meal, and a glass as a digestive – no more. There are entire volumes of books dedicated to the making of Russian vodka, but we will reveal two secrets known to every Russian yet unknown to foreigners. The first secret is this: there is no such thing as ‘homemade vodka’. Vodka is exclusively produced in factories, made solely from grain alcohol. The second secret is that high quality vodka is not necessarily the most expensive. The most popular choice for celebrations is usually medium-priced vodka. Nowadays, the latest distilling equipment is capable of producing higher quality vodka.

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