Distributed with The New York Times
Putin’s anticorruption campaign intensifies
St. Petersburg forum on Dvorkovich’s agenda
Young Russians lead effort to establish charity shops
This special advertising feature is sponsored and was written by Rossiyskaya Gazeta (Russia) and did not involve the reporting or editing staff of The New York Times.
Manufacturing Foreign car firms happy to agree to localization requirements to enter Russian market
A Special Advertising Supplement to The New York Times
WEDNESDAY, MAY 22, 2013
NEWS IN BRIEF U.S., Russia fail to agree on Syria conference participants Just after the United States and Russia announced plans to organize a conference to discuss the situation in Syria, a conflict over participants has threatened to derail the initiative. Russian Foreign Minister Sergei Lavrov has accused the U.S. of wanting to limit participants to members of the opposition, while Russia wants to include representatives of the Syrian government, as well as officials from Iran and Saudi Arabia. The conference is scheduled for June.
New government incentives that encourage foreign companies to produce more models within Russia will benefit local consumers. ANDREI SHKOLIN SPECIAL TO RBTH
Private car ownership, shunned in Soviet times as an alternative to public transportation, has witnessed an unprecedented boom in Russia since the turn of the century, with 12 percent growth in 2012 alone. A major factor contributing to Russia’s automobile boom has been, somewhat ironically, the same high oil prices that have hit American car owners for the last decade. Russia is the world’s sec-
ond-largest oil exporter, and because of increased oil prices, Russians have seen their nominal monthly incomes increase by a factor of 16 over the last decade. The increase in incomes has also led to an increase in consumption, and the world’s auto giants took notice. Ford was the first to move into Russia in 2002, opening a $150 million plant in Vsevolozhsk, outside St. Petersburg. The American firm was followed by Renault (2005), Volkswagen (2007),Toyota (2007), G.M. (2008) Peugeot/Citroen/Mitsubishi (2010) and Hyundai (2011). The number of domestically assembled foreign cars sold in Russia increased from 290,000 in 2007 to 1.22 million in 2012.
PricewaterhouseCoopers predicts these figures will hit 1.33 million this year.
Second Wave of Localization The increase in foreign factories was not just a result of demand from manufacturers. The Russian government developed incentives to make the move more attractive. According to analysts, the government’s intention has been to maximize local production and bring foreign technology within the country’s borders. Said U.B.S. analyst Kirill Tachennikov, “Although the current documents outlining state policy in the automobile industry don’t say this explicitly, one can clearly see between the lines that the aim is to
Alcohol Experts see room for growth for mid-range wines in Russia
American Wines Look for the Middle Ground
American wines available in Russia tend to be very cheap or high end.
Interest in wine culture is increasing among the Russian middle class, but mid-range U.S. wines face particular challenges getting access to the market. ANTON MOISEENKO SPECIAL TO RBTH
When American wines returned to Russia in the early 1990s, the best sellers were cheap, sweet wines that were similar in taste to well-known Soviet brands. Today this type of mass-market wine continues to dominate, but industry experts believe there is
potential for mid-market American wines that stand out from the crowd without breaking the bank. With import duties as high as 18 percent as well as many other taxes and margins, Russian wine drinkers are used to paying at least double for any bottle of wine purchased locally compared to the same bottle bought in Europe. The Russian wine market remains very fragmented, and consumers are either looking for a bargain at the low end or buying wines at $200–300 per bot-
Russia’s Auto Industry Goes Into High Gear
© RIA NOVOSTI
Additional details emerge from C.I.A. spy scandal
tle. Cheaper American supermarket wines such as Paul Masson, Carl Rossi and Gray Fox can be found at as low as 200–300 rubles ($7-10), but U.S. wines mostly fall in the $10+ price category. Many prestigious U.S. wineries have also been available on the Russian market for some time and continue to do well among a certain clientele. These include Paul Hobbs, Ridge, Opus One, Sine Qua Non, Kistler, Pahlmeyer, Diamond Creek and Château Ste. Michelle. Russian wine importers themselves are usually seeking either entry-level wines (with unclear identity) or the most expensive wines (leading to low volumes of sales and a low P.R. impact). “There’s no middle point,” said Olga Tuzmukhamedova, head of the Russian office of the Wine Institute of California. The ratio of price to quality doesn’t work well in Russia.“Forget it,” said Sandro Khatiashvili, a member of the board of directors at wine distributor Simple Group. “Russians do not choose their wines based on price/quality relation. With quality wines people choose brands, and then goes price.” CONTINUED ON PAGE 4
localize assembly and reduce imports.” The contracts signed between 2005 and 2007 had soft localization requirements (up to 30 percent) and low volumes (some as low as 25,000 cars annually) enabling foreign giants to test the Russian market. Agreements in 2011 with Renault-Nissan, G.M., Ford and Volkswagen stipulated that local components are to reach 60 percent with an output of 300,000 cars annually each. Thirty percent of foreign car brands produced in Russia are also to be equipped with Russian-produced engines and gearboxes. In exchange, the companies have been promised duty-free import of components until July 1, 2018. Russia’s Ministry of Industry and Trade predicts continued growth of the country’s car market to 4.17 million by 2020. At that point, a full 3.75 million are expected to be produced in Russia.
A Chevrolet Lacetti is assembled at a new General Motors plant in the Russian exclave of Kaliningrad. The American firm began producing cars in Russia in 2008.
On the night of May 13–14, Russia’s Federal Security Service (F.S.B.) apprehended a C.I.A. agent allegedly in the process of attempting to recruit a Russian security services officer. The agent was later identified as Ryan C. Fogle, who had been working in the political section at the U.S. Embassy in Moscow. After the incident, the F.S.B. noted that since 2011 it had noticed an upsurge in U.S. counterintelligence operations and that this was not the agency’s first attempt to recruit a Russian officer.
ONLY AT RBTH.RU
“Dancing Petersburg” moves to the rhythm of summer RBTH.RU/25613
RUSSIA BEYOND THE HEADLINES
MOST READ Russian Opposition Tries to Hold on Despite Challenges rbth.ru/25809
SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU
Parties United Russia faces uncertain future
Politics Public opinion turns against government officials who flaunt their wealth
Challenged from Within and Without As United Russia’s reputation continues to suffer and Vladimir Putin voices increasing support for his People’s Front, what’s in store for the ruling party? DAN PELESCHUK SPECIAL TO RBTH
Once an all-powerful vanguard party that helped PresidentVladimir Putin consolidate support and increase his influence over Russian politics, United Russia has seen better days. Now, with its reputation damaged amid a string of scandals and growing political awareness among Russia’s opposition-minded classes, some experts say the ruling party faces an uncertain future. The past several months alone have seen a series of corruption scandals ripple through the ruling party while the persistence of the anti-Kremlin street movement has also proven damaging to the party’s reputation. According to a recent survey by the independent Levada Center polling agency, around 51 percent of the population agrees with the moniker“party of crooks and thieves,” coined by opposition blogger Alexei Navalny for United Russia. That figure is up from around 36 percent last year. But the question remains: if United Russia is in trouble, will it reform, or fade completely from Russia’s political arena? Observers say a downturn in support for the ruling party, which was fast-tracked by the outbreak of anti-Kremlin protests in December 2011, has led to Putin’s increasingly vocal support for the All-Russian People’s Front, a broad alliance created in May 2011 that brings together loyal politicians and leaders from an array of civic organizations across Russia. The president’s support for the group has led observers to speculate whether the People’s Front will replace United Russia altogether as a support base for the Kremlin. Since the outbreak of the protests, Putin has gradually disassociated himself with United Russia over what experts say has been the party’s loss of credibility. “At the moment, Putin wants to remain outside the party so that United Russia’s reputation doesn’t tarnish his image,” said Olga
An anticorruption protester calls on officials to “Stop the bribes” with her poster at a recent demonstration in Moscow.
Russians See Officials’ Money as the Root of All Evil Opinion polls show that a majority of Russians see a connection between well-to-do public servants and corruption in the government.
How Russians Feel About Wealthy Bureaucrats
that the government is corrupt for years now,” said Volkov. In Volkov’s opinion, the popularity of the anticorruption campaign led by lawyer and blogger Alexei Navalny can be attributed to these feelings, and in turn, the popularity of the campaign spurred the government to action. “Only after that did the government react,”Volkov said.“Now it has begun doing its own anticorruption exposés.” The list of victims of these exposés is growing. Members of both chambers of parliament have been forced to give up their seats. Some, such as Gennady Gudkov and Alexei Knyshov, are suspected of illegal business activities while others, including Vladimir Pe-
khtin and Vitaly Malkin, are accused of hiding high-priced assets, including foreign real estate. Ongoing investigations into the possessions of high-placed former officials in the Ministry of Defense are also moving forward. Former Defense Minister Anatoly Serdukov stepped down last year after a graft investigation. “Russian citizens are firmly convinced that state officials and deputies do the work they do solely to line their own pockets,”said Volkov.“This undermines the authority of the State Duma, whose work no one sees as independent. It’s a vicious circle: On the one hand, people feel that corrupt officials should be exposed. On the other, they do not believe in the
sures prohibiting state officials from having foreign property and accounts. There is a popular opinion among ordinary Russians that
ceptible to unwanted foreign influence and even put them at risk of blackmail, thereby undermining the country’s ability to pursue an independent foreign policy. Yet it is easy for a politician to really cross the line if he makes decisions based only on the opinion of the public. Some of the poll respondents did not even rule out public execution and confiscation of the property of corrupt officials.
There is a popular opinion that officials see their future in the West, where they have their accounts.
The government believes that foreign assets make officials susceptible to unwanted foreign influence.
many officials see their future in the West — where they have their accounts, where they go for vacations, where their families often live and where their children go to school. The government, for its part, believes that the foreign assets of Russian officials make them sus-
Putin does not want to revisit the great purge undertaken against state officials during the Stalin era. A harsh crackdown might cause severe political shocks that will take quite a long time for the country to forget. Moreover, it would call for a special agency consisting of ruthless, hardline
Putin’s Anticorruption Campaign Can Be Seen as a New Form of Patriotism Georgy Bovt SPECIAL TO RBTH
residentVladimir Putin’s current anticorruption campaign looks like an attempt to “nationalize” the state elite by increasing their stakes in Russian institutions. To this end, bureaucrats have been banned from possessing foreign shares, bank accounts and certain other assets. By July 1, officials are supposed to get rid of any foreign assets they might have, but observers point out that accounts abroad can still be registered to trust funds and that property of companies owned by spouses and children is not subject to control.
Statistics show that the Russian public would be in favor of even stronger measures. For example, 50 percent of respondents in a recent survey by the independent Levada Center believe that the officials who fail to declare property should be criminally charged. So why doesn’t Putin take more resolute action? On the one hand, Putin is making a logical move for a politician seeking to stay in sync with the prevailing public mood. Levada Center polls show that 46 percent of Russians believe the struggle against corruption is the most important issue facing the president. On the other hand, Putin must take into account the limits of his power. More than two-thirds of the population approves of the mea-
results of the [government’s] anticorruption campaign.” Vyacheslav Smirnov, director of the Institute of Political Sociology, argues that through their behavior, state officials are themselves responsible for the increasing dissatisfaction among rank-and-file citizens. “In Russia it’s not the rich we don’t like — it’s the rich who flaunt their money,”Smirnov said.“State officials have no sense of proportion and are not ashamed of showing off their financial position.” Smirnov said that the first priority should be discouraging people from entering government service whose aim is to take advantage of their position rather than to serve the country.
According to a recent survey from the Levada Center, an independent polling agency, Russians are increasingly intolerant of wealth among state officials. Ordinary people not only consider a life of luxury for public servants inappropriate, but they also make a direct connection between wealthy holders of government jobs and corruption. Only 13 percent of all respondents to the recent poll considered it normal for a state official or Duma deputy to be rich. A full third of respondents called that situation indecent, while 44 percent went even further, calling it criminal. An overwhelming majority of respondents (62 percent) favor establishing a cap on incomes for government employees and 20 percent agree with the statement that state officials should declare all their property. This poll did not specify what level of income makes a person “rich” in the understanding of respondents; however, previous surveys showed that Russians consider someone who earns at least 110,000 rubles a month (nearly $4,000) wealthy. Levada Center expert Denis Volkov called the results of the poll predictable. “Russians have had the sense
SPECIAL TO RBTH
Kryshtanovskaya, a sociologist, former United Russia party member and an expert on the Russian ruling elite. Yet the Kremlin has not quite abandoned the ruling party. As recently as March, Putin emphasized the “need to preserve the unity of the United Russia faction in the State Duma,”according to reporting by RIA Novosti.To be sure, the party remains by far the most dominant force in politics and, despite some disappointments, secured comfortable victories in last October’s nationwide regional elections. Nevertheless, United Russia is likely looking down the road at the next Duma vote, which some have speculated could arrive as soon as within a year, should Putin decide to dissolve parliament and call snap elections. And here may lie the key to the party’s future. Legislation recently submitted by Putin would enact changes to the method of electing representatives to the State Duma. Under the proposed law, half of the legislature would be elected from political party lists and the other half chosen from singlemandate constituencies. Some experts say this would allow freshfaced, Kremlin-loyal candidates outside of United Russia to run as independents under the banner of the nominally apolitical People’s Front. According to Kryshtanovskaya, that could pave the way for cohabitation in parliament between the People’s Front and United Russia, creating an even stronger — and, arguably, more credible — parliamentary base of support for the Kremlin. “I don’t exclude that in the more distant future, we’ll see a two-party system,”she said,“in which United Russia would be a center-right party, and the People’s Front a center-left party.” As for United Russia itself, she says, its fate is dependent largely on Putin, especially given Russia’s system of personalized politics: “If Putin were to lose power tomorrow, absolutely nothing would remain of United Russia.”
Putin speaking at an All-Russian People’s Front meeting in Kemerovo.
people who would report directly to the president. Such people are nowhere to be found at the moment and even if they were, there is no guarantee that they would all be honest. Instead, President Putin has chosen a different way — a seemingly trouble-proof compromise. Putin has given bureaucrats a clear signal that the rules of the game are changing and the policy of “anything goes”— founded on the tacit deal that there will be no sanctions for stealing as long as there is political loyalty — is now over. Every official will have a chance and the time to adapt, and those who are not ready to play by the rules will not be shot but rather allowed to leave state service to pursue a different career. Even if the law operates selectively — the way 41 percent of respondents in the Levada Center poll believe it will — it will still be a step in the right direction. As soon as the first victims of the new order appear among Russian officials, others will be concerned that, in this new environment, there is nothing to help them get
away and they may well be the next in line to be punished. In addition, society is being encouraged to pinpoint corrupt officials. The series of high-profile resignations by Duma deputies and senators following incriminating online publications shows that online exposure is no longer pointless. Chief of Staff Sergei Ivanov has already said that whistleblowers will enjoy state protection, thus launching a mechanism encouraging subordinates not to be afraid of revenge on the part of their corrupt superiors. Indeed, the best way to fight corruption is to engage the public at large. If society believes that the authorities seriously intend to crack down on corruption and offers its support in word and in deed, the anticorruption campaign is bound to succeed. Georgy Bovt is a journalist and political analyst who is also a member of the Council on Foreign and Defense Policy. rbth.ru/ 24961
SPECIAL SUPPLEMENTS AND SECTIONS ABOUT RUSSIA ARE PRODUCED AND PUBLISHED BY RUSSIA BEYOND THE HEADLINES, A DIVISION OF ROSSIYSKAYA GAZETA (RUSSIA), IN THE FOLLOWING NEWSPAPERS: THE DAILY TELEGRAPH, UNITED KINGDOM • THE NEW YORK TIMES, THE WALL STREET JOURNAL, UNITED STATES • LE FIGARO, FRANCE • SÜDDEUTSCHE ZEITUNG, GERMANY • EL PAÍS, SPAIN • LA REPUBBLICA, ITALY • LE SOIR, BELGIUM • GEOPOLITICA, SERBIA • ELEFTHEROS TYPOS, GREECE • THE ECONOMIC TIMES, THE NAVBHARAT TIMES, INDIA • MAINICHI SHIMBUN, JAPAN • GLOBAL TIMES, CHINA • SOUTH CHINA MORNING POST, CHINA (HONG KONG) • LA NACION, ARGENTINA • FOLHA DE SÃO PAULO, BRAZIL • EL OBSERVADOR, URUGUAY • JOONGANG ILBO, SOUTH KOREA • THE SYDNEY MORNING HERALD, THE AGE, AUSTRALIA • GULF NEWS, AL KHALEEJ, UNITED ARAB EMIRATES • MORE DETAILS AT RBTH.RU/ABOUT.
MOST READ Russia’s Prisons Try to Shake Off Gulag Legacy rbth.ru/25805
RUSSIA BEYOND THE HEADLINES SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU
Media New channel focuses on social and educational programming
PBS Meets Pravda in New Public TV Channel Public Television Russia was supposed to be funded by donations from the public, but to get the channel off the ground, the government had to step up. DMITRY ROMENDIK SPECIAL TO RBTH
After more than a year of discussion and planning, Public Television Russia (OTR) went on the air on May 19 with a 25-minute newscast. The channel plans to fill its schedule with original programming focused on Russia’s regions, history and culture. Immediately after the news broadcast, the channel debuted the show “Big Country,” which features reporting from regions far from Moscow and St. Petersburg. According to the channel’s promotional material, the purpose of the show is to“help Russians stop dividing into ‘us’ and ‘them.’”The material noted that the show will work with regional television stations to show the people and history of Russia’s “little-known” and “little-explored” regions. The channel filled out its first day’s programming with documentaries, although Andrei Lysenko, head of the channel, said in an interview with Russian daily Kommersant that this was only the schedule for the first day and that in the future the channel would fea-
ture regular sociopolitical programming. Some of the new channel’s shows appeal to a feeling of nostalgia for the Soviet past, but with an appeal to today’s modern, urban population. One such show, focused on public activists, devoted its first episode to the Soviet-era Pioneer youth organization, which was analogous to the Boy Scouts or Girl Scouts.
time,”whose lives and actions can serve as an example for others. Describing the programming, Andrei Reut, editor-in-chief of the RBC business news channel, said: “This is exactly what Russian television lacks — a smart, independent and socially relevant channel reflecting the interests of society and refraining from the criminal agenda and vulgar reality shows that drive ratings up.”
Some of the channel’s new shows appeal to a nostalgia for the Soviet past, but with an appeal to a modern population.
Funded by the Public
The original plan called for the channel to be funded through underwriting and donations. The episode reminded viewers how to tie a Pioneer tie, but it also discussed the value of the Pioneer organization and asked what groups play the role of the Pioneers today in instilling values in young people. Later episodes of the program will focus on the work of civil society activists, people the program’s producers call “the heroes of our
89% from television
The initiative for a new television channel was first proposed by then-President Dmitry Medvedev in 2011. The original plan called for the News Web channel to be funded prisites or other marily through underwritInternet ing from companies and donations from individuPrinted press als, much in the manner (newspapers, of public broadcasters in magazines) talks with the United States and the relatives and friends U.K. Thirty-nine percent of National Public Radio’s operating costs are covered by its listeners, while the BBC is funded by television license fees, a kind of tax on television owners. However, experts from Russia’s Ministry of Communications and A January poll conducted by the Mass Media later calculated that Public Opinion Foundation (F.O.M.) up to 100 billion rubles (about asked Russians where they look for $3.3 billion) would be required news and information. Respondents to ensure the competitiveness of could give more than one answer. the projected television network
Where do Russians get their news?
Public Television Russia launched with a newscast on May 19.
and since Russia does not have laws in place to fund public broadcasters, as in the U.K., nor are Russians accustomed to donating money to broadcasters, as in the U.S., the government realized it would have to step up. The authorities have outlined plans to allocate around 1.5 billion rubles ($60 million) annually to see the project through. Social advertising from various government ministries and departments will constitute another source of income for the new network. There are no plans to look for commercial advertisers or to provide progamming that is considered pure entertainment with no educational value. This decision by the government to fund the new channel
by itself provided new impetus for Russian media professionals to criticize the initiative. IgorYakovenko, a former Secretary General of the Russian Union of Journalists, has little doubt about the credibility of the new channel. It will be “a complete fake and yet another government television network,”Yakovenko said. RBC’s Reut expressed a similar view.“The impetus for the creation of public television did not come from the people. It is a government project,”Reut said.“The government pays the piper, so the government calls the tune. Given that the channel is heavily subsidized, it may take root in its market niche, which is, most probably, the niche of another government television network.”
Business Releasing prisoners convicted of white-collar crimes could be a way to introduce more transparency into the Russian economy
Entrepreneurs’ Advocate Calls for Amnesty ALEXEI BAUSIN RUSSIA BEYOND THE HEADLINES
Business ombudsman Boris Titov has proposed that the State Duma declare an amnesty for businessmen convicted of economic crimes for Entrepreneurs’ Day on May 26. According to Titov, the amnesty would guarantee“a stable and growing economy.” Such an amnesty would see former oil tycoon Mikhail Khodorkovsky walk free. At present, 110,924 people are serving time for economic crimes in Russia, according to members of the ombudsman’s advisory council. The council estimates that 53 categories of economic crime would fall under the amnesty, including fraud, embezzlement and “causing damage to property by deception or abuse of trust.” While on the surface the move appears controversial, Titov explained in an interview with business daily Kommersant that the
amnesty is a way “to turn over the page of history that was written in the wild 90s.” Additionally, the amnesty would give a clear signal that prosecutions for economic crimes would no longer be based on political decisions, but on actual facts.
110,924 people were convicted of economic crimes from 2009 through 2012, despite changes to the laws governing economic crimes.
A work in progress In the past decade, some attempts have been made to clarify or rewrite the laws governing economic crimes. According to Titov, “work to humanize criminal legislation in the economic sphere has been partially carried out and the tax laws amended to encourage transparent business schemes.”Nevertheless, he noted that the changes are a work in progress, saying: “Today, criminal prosecution under ‘made-to-order cases’ remains a means to seize property.” From 2009 through 2012, he said, “no fewer than 600,000 people were arraigned, resulting in 110,924 convictions.” The proposed economic amnesty has attracted attention partially because it affects the articles of the Criminal Code cited in the charges brought against former
53 categories of economic crimes would be eligible for the amnesty, including fraud, embezzlement and causing damage to property by deception.
Russia’s business ombudsman has proposed an amnesty for businessmen guilty of economic crimes that might free Mikhail Khodorkovsky.
Boris Titov has called for an amnesty in honor of Entreprenuers’ Day.
From businessman to ombudsman Boris Titov has held the position of business ombudsmen since it was created in June 2012. He holds a degree in international economics from the Moscow State Institute of International Relations (M.G.I.M.O.). He began his career in 1993 in the oil and petrochemicals industry,
and in 1991, created his own firm to trade in petrochemicals and gas goods. Known as Solvalub Ltd., it later grew into the S.V.L. Group of Companies. In 2004, Titov was elected chairman of Delovaya Rossiya, a nonprofit promoting the rights of businesses across Russia.
Yukos oil company C.E.O. Mikhail Khodorkovsky, who is currently serving his 10th year in prison at a prison colony in Karelia, near the Finnish border. The State Duma and the ombudsman’s inner circle have declined to comment on that point. Pavel Krasheninnikov, head of the State Duma Committee on Criminal Legislation, told RIA Novosti that Titov’s amnesty proposal could find backing. “For me, it is obvious that most
of those convicted for economic crimes should not be in prison,” Krasheninnikov said. “The articles need to be amended to introduce heavy fines in lieu of jail time, even if the sentence is short.” Chairman of the State Duma Committee on Economic Policy, Innovation Development and Entrepreneurship Igor Rudensky described the initiative as interesting, but in need of serious reflection. Earlier this month, President Vladimir Putin signed a new law on the protection of entrepreneurs’ rights. The document defines the legal status, main tasks, and competencies of the federal ombudsman and his regional representatives. According to the law, their main tasks will include protecting the rights and legitimate interests of entrepreneurs, monitoring the compliance of state bodies and local administrations with such rights, assisting in the development of social institutions aimed at protecting the rights of entrepreneurs, interacting with the business community, and participation in the drafting and implementation of relevant government policy.
GET FREE ACCESS TO THE RBTH DIGITAL PUBLICATIONS from more then 15 countries
RUSSIA BEYOND THE HEADLINES
MOST READ The Renaissance of Russia’s Wine Country rbth.ru/25401
SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU
Oenology Winemaking has a long history in Russia, but local wines struggle to gain a foothold in the market both at home and abroad
Convincing Consumers That ‘V’ is for Vineyard, Not Vodka © SERGEY ANASHKEVICH_RIA NOVOSTI
Left: Vineyards of Château le Grand Vostok, a Russian winery that opened in 2003 and attempts to produce wine according to French standards. Right: Barrels of premium Russian wines from the Rostov Region.
DENIS PUZYROV SPECIAL TO RBTH
Russia’s flagship winery, AbrauDurso, was founded by decree of Emperor Alexander III in 1870. However, Russian wine has some challenges finding a market abroad, and not just because it comes from the land of vodka. More than 80 percent of the wines sold in Russia today are semisweet — a fact that can be attributed in part to Joseph Stalin. As part of the process of industrialization following the Russian Revolution, the Soviet Union developed a program to provide food to the masses. Wine was included in this program, partially because Stalin, who oversaw the program, was Georgian and his minister of the food industry, Anastas Mikoyan, was Armenian. Winemaking culture has ancient roots in both Georgia and Armenia and, in fact, archaeological excavations have shown that the culture of winemaking is older in these South Caucasus countries than in Greece. Outside of these small republics, however, the Soviet Union had little land suitable for cultivating high-quality grapes. Also, the cost of winemaking had to be lowered to make wine affordable for every Soviet citizen. Scientists turned their attention to the problem, and frostresistant, high-yielding varieties of grape were bred in the Soviet Union. This did not help with quality, though; wines made from these grapes had high levels of acidity and no particular taste. To remedy this flaw, grape sugar and ethyl alcohol were added in the winemaking process. This technology is widely used in Russian winemaking to this day. Elena Denisova, chairwoman
of the board of Château le Grand Vostok, one of Russia’s few quality wine producers, described the process this way: “Plants in Iran or Italy use bad grapes or juicemaking waste to produce a concentrate that is essentially poorly refined grape sugar. This concentrate is added to poor, sour, semi-wine at the fermentation stage or mixed in with ready fermented wine material in an at-
cheapest wines in liter-size cartons. The top end of such wines averages $3 per liter. Makers of quality Russian wines have long been pushing for minimum retail prices for wines in Russia of at least $4 per bottle because they cannot compete in the local economy segment. The most radical winemakers even go as far as to suggest that the government ban cheap wines alto-
Makers of quality Russian wines have long been pushing for minimum prices of at least $4 per bottle.
Russian wine makers have to compete with hard liquor and beer, which are more popular beverages by far.
tempt to correct its awful taste.” But because this kind of sweet wine was all that was available, and because it was widely celebrated by the Soviet leadership, Russians who grew up in the Soviet era are comfortable with these varieties — and even prefer them to drier wines. And because these were the kinds of wines they served at home, the preference has been passed on to younger generations. It helps that this wine is also cheap. In the economy segment of the Russian wine market, the share of cheap wines exceeds 90 percent. Seven out of 10 Russian market leaders in terms of volume are plants producing the
gether because their very existence discredits winemaking as an industry. Denisova is a proponent of such action. “Why keep the jobs of bad winemakers or Iranian producers of concentrates?” Denisova said.“Why not create jobs for good viticulturists in Russia’s south?” Russian winemakers also have to compete with hard liquor and beer, which are more popular beverages by far, as well as increased competition from foreign imports. Wine sales in Russia dropped last year, partially as a result of pressure from liquor makers and multinational breweries. According to Russian State Statistics Service Rosstat, the output of still
80% 63% 0.6% of wines that are sold in Russia are semisweet, a fact that can be attributed in part to Joseph Stalin.
is the share of Russian wines on the local market, which amounted to 485.1 million bottles in 2012.
of U.S. wine exports go to Russia, and there are substantial obstacles to increasing that number.
wines shrank by 9.2 percent in 2012 while vodka output rose 13.2 percent. Wine imports increased 4.5 percent, but supplies of highquality wines tumbled 42 percent to 60.4 million bottles. Rosstat numbers shows that Russia’s still wine market amounted to 485.1 million bottles in 2012, with Russian wines accounting for 63.2 percent. All is not lost, however. In recent years, Russia has seen the emergence of wineries whose products would not be out of place in the glasses of the most exquisite wine connoisseurs. Abrau-Durso, in the foothills near the Black Sea port of Novorossiysk, is considered to be the leader of Russia’s new wine industry. In addition to Abrau-Durso and Château le Grand Vostok, wineries that are focusing on quality include Lefkadia andVedernikov. They are all located in southwestern Russia in either the Krasnodar Territory or the Rostov Region, where soil and weather conditions are best suited for wine-growing and -production. In 2012, a Russian Wine Guide was published in the country for the first time, describing 55 wines from 13 Russian wineries. After the experience, one of Russia’s leading sommeliers, who took part in writing the guide, expressed the hope that the emergence of “great Russian wines” was not too far off.
Wine imports to Russia by country
Wine is hardly the first alcoholic beverage from Russia that comes to mind, yet winemaking has a long history in the country.
SOURCE: ASTI GROUP
Looking for the Middle CONTINUED FROM PAGE 1
Below a certain price point, consumers focus on a better package, a nicer label and a simpler taste over the point of origin. Elena Kazakova of import firm Whitehall, which distributes Paul Masson in Russia, said: “Paul Masson sells well because it has such a long presence on the market, such an uncommon packaging and — considering all this — quite a normal quality and an attractive price.”
A matter of taste Most often, Russians drink wine without concern for the food pairing. They consider wine something made to drink alone, which is why wines that appeal even to sophisticated Russian wine drinkers should have a personality of their own. “New World wines are ideally fit to the Russian taste,” said Christina Monkus, marketing director of import firm Eurowine. “We love friendly, fruity, bright taste. We do not want to spend 15 minutes trying to understand what’s in a glass. We like to be blown away with taste.” Vlada Lesnichenko, the director of the premium Grand Cru wine shop network, also thinks that American wines stylistically fit into Russian taste preferences: “There is a growing interest in the U.S. wines, and in part it can be explained by our similarities in terms of food and wines style. Reds — fruity and rich, powerful but soft, with a good
potential, but ready for drinking at the same time; round, but with high alcohol content. Whites — dense, oily, close to Burgundy style but easier to approach. Simplicity and clearness is the main reason to choose an American wine for many of our consumers,” she said. Geographically, Russia is a great location for Californian reds. Alex Krause, exports director for Bonny Doon Vineyards, said: “It’s bloody cold in Russia most of the time, thus primarily [we sell] reds. I think in general wines that sell in the U.S. for $1520 have the largest potential for doing volume in Russia.” Lesnichenko agrees, specifying the potential of American Zinfandel: “Our clients recognize Zinfandel, which shows great both in middle and top wines — lush, rich and powerful, quite fruity, but with soft tannins.”
Still sideways Right now, Russia accounts for only 0.6 percent of U.S. wine exports, and there are substantial obstacles to increasing that number, on both the commercial and educational sides. New legislation banning advertising of alcohol and limiting possibilities to conduct wine tastings has forced importers to get creative. The Wine Institute of California has been working to adapt to the new rules. “We are tending to work more with chefs and connecting the wines with fine dining,” said Olga Tuzmukhamedova, adding: “The other difficulty is bringing to Russia samples of wines not currently present on the market, for our big annual tasting. These samples have to pass a long, expensive and bureaucratic customs control, which makes the whole event impossible to organize properly.”
The Russian Pioneer Who Changed Napa André Tchelistcheff, who was partially responsible for putting American wines on the world wine map, was a Russian émigré who fled the country during the civil war. Tchelistcheff first studied agriculture in Czechoslovakia and then oenology at the French Institut Pasteur and the Institut National Agronomique. Eventually he became chief winemaker of Beaulieu Vineyards in Napa Valley. The
technological improvements and the new winemaking philosophy he brought to the U.S. were tremendous. The winemaking techniques he pioneered such as fermentation control, better vineyard management and the use of small French oak barrels are taken for granted today. Among the dozens of wineries that made use of his services are Château Ste. Michelle and Columbia Crest Winery.
MOST READ Russia and the W.T.O.: Equality Without Fraternity rbth.ru/25997
RUSSIA BEYOND THE HEADLINES SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU
INTERVIEW ARKADY DVORKOVICH Is there something that makes up for Russia’s shortcomings in the eyes of foreign companies? We have a huge market of 150 million people. This market attracts consumer goods manufacturers. Look at how automotive production is booming in Russia. Leading world carmakers such as Ford, Toyota and VW began opening assembly lines here six or seven years ago; now they are launching a second wave of localization. As of March 2013, the Russian Ministry of Economic Development had signed 31 industrial assembly agreements with a number of leading international car makers, which together account for over 90 percent of all vehicles manufactured globally. In other sectors, however, things are not happening as fast as we would like.
We Must Get Rid of Inefficient Economic Sectors RUSSIAN DEPUTY PRIME MINISTER SPEAKS WITH RBTH ABOUT PRIVITIZATION, ENERGY DEPENDENCE AND HOW THE REST OF THE WORLD VIEWS THE RUSSIAN ECONOMY.
In your 2011 interview with Larry King, you said there was too much state intervention in Russia’s economy, which left very little room for private business. Has the situation changed in the past two years? It has, to a degree. We are successfully implementing the program to have governmentcontrolled assets privatized by 2018.We sold 7.58 percent of [Rus-
sia’s retail banking giant] Sberbank for $5.2 billion last September. This year the process of state withdrawal from major businesses is set to continue. VTB Bank, Russian Railways, [diamond company] Alrosa and [shipping company] Sovcomflot are preparing for I.P.O.s. No exact dates have been set, since these businesses will be sold with due regard for the market situation. In short, we view privatization as a means toward increasing competitiveness and efficiency. Our secondmost important goal here is to replenish the budget: the money raised [through privatization] will be used to finance long-term investment programs. The Russian government in the past few years has been repeatedly stressing the need to diversify the economy. However, according to the Federal Customs Service, the share of nonprimary goods in overall exports shrank 4 percent last year. Why? Although oil and natural gas historically account for a high proportion of Russia’s exports, the sector is growing at a much slower pace than elsewhere across the industry. We observe a rapid growth in processing; our I.T. sector has been growing at 15 to 20 percent annually over the past decade. The monetary value of our oil exports has indeed risen, but this is because the crude pric-
es are rising. If crude sold for $70– $80 a barrel, and not its current price of $105–$110, then the balance would tip towards nonprimary exports. But you have to agree it is a good thing that the oil prices are not falling. When will Russia be able to overcome its dependence on energy exports? For this to happen, we must first get rid of the inefficient economic sectors and build new, efficient production facilities. This is a lengthy process, but we are trying to create an environment that would facilitate business development and help attract investment. We offer tax rebates to individual sectors, such as I.T., and to production facilities situated in special economic zones; we create the necessary infrastructure at science parks. Five years ago there was virtually zero interest in innovation in Russia; now there are hundreds of start-up projects operating in this country. We have set up the Skolkovo Innovation Center, which is attracting foreign companies to our country; some of these companies have already launched operations not just in Moscow but in Novosibirsk, St. Petersburg, Rostov, Kazan and other Russian cities. What is stopping foreigners from investing in Russia? Investing in Russia is not always
You have been much criticized in the media recently. How do you feel about it? Only those who do nothing receive no criticism. Other countries’ governments also get criticized because, in searching for a growth model amid budget austerity, they are often forced to take difficult and sometimes controversial decisions. The task I have set myself for my first year in the current post involves creating a stable regulatory environment for those industries I am in charge of. [Dvorkovich supervises the fuel and energy complex as well as communications, transport, agriculture and several other sectors.] Some aspects of this work have yet to be addressed, including subsoil licensing, environmental regulation and the fiscal environment for the oil and gas sector. Oil and gas companies will not risk major investments unless they understand what the rules of the game will be for the next several years.
A native of Moscow, Arkady Dvorkovich is an alumnus of both the Faculty of Economics at Moscow State University and the Higher School of Economics. After leaving school, he joined Russia’s Finance Ministry, where he worked on macroeconomic reforms.
Dvorkovich took a leave of absence from his position to study at Duke University; he received an M.A. in economics from the school in 2007. Although Dvorkovich was considered a member of Vladimir Putin’s team, he became a close economic adviser of Dmitry Medvedev during his presidency. Upon Putin’s election to his third term, Dvorkovich was appointed deputy prime minister in charge of the real economy.
competitive when compared to investing in other countries for a number of reasons. The president and prime minister have instructed us to change this. In particular, Russia has to make it to the top 20 on the World Bank’s Doing Business ranking by 2018. We are progressing in that di-
rection; for example, we have considerably simplified the business registration process. In just one year, Russia has risen from 120th to 112th position in the rating, and in separate aspects [of the rating] our progress has been even more impressive.
NATIONALITY: RUSSIAN AGE: 41 STUDIED: ECONOMICS
The St. Petersburg International Economic Forum, the largest such event in Russia and Eastern Europe, will take place in June. The 2010 forum saw the signing of contracts for a whopping total of 15 billion euros ($19 billion). Do you think this year’s event will beat that record? The St. Petersburg forum is indeed one of the largest in Russia. In my view however, it is not intended for record-setting purposes. It is a platform for interaction that brings together the heads of Russian and international companies. The most important developments usually take place on the sidelines, during talks on specific projects and investment programs. A contract does not necessarily have to be signed at the venue; it may materialize a month or even half a year after the forum. This year, we will be hosting top-ranking delegations from Germany and the Netherlands: Russia is having bilateral years with these two countries. Has the forum’s agenda been finalized yet? We will be generally discussing the prospects of the global economy. In fact, the St. Petersburg forum always pursues two goals. These are, first, filling our partners in on which decisions we have made or are planning to make in the near future so they know what to expect; and second, it is providing a venue for discussions and talks. Prepared by Elena Shipilova
Debuts Russian e-payment firm issues an I.P.O. in New York, joining only a handful of other Russian companies on U.S. exchanges
QIWI Raises Millions in Nasdaq Offering Known in Moscow for its ubiquitous yellow-and-blue payment kiosks, QIWI attracts a new group of American investors in its recent Nasdaq I.P.O.
Making money in the U.S.A.
ELENA SHIPILOVA RUSSIA BEYOND THE HEADLINES
QIWI, Russia’s largest instant payment operator, raised $212 million in its May 3 I.P.O. on the Nasdaq exchange (NDAQ:QIWI). QIWI shareholders sold 12.5 million class B shares in the form of American depositary receipts, each at $17. Investors valued the company at $884 million based on the I.P.O. According to online magazine Cnews.ru, Mail.Ru Group, an investment firm specializing in web projects, earned the most from the offering; the organization sold 3.05 million shares for $51 million. Andrei Romanenko, chairman and former president of QIWI, followed, earning $47 million from the sale of 2.8 million shares. Andrei Muraviev, head of the investment firm Parus Capital, ranked third, with 1.9 million shares sold for $32.3 million. Current QIWI C.E.O., Sergei
Major telecom operators Mobile TeleSystems and Vimpelcom were the first Russian companies to go public in the United States, conducting placements on the New York Stock Exchange more than 10 years ago. These firms were followed two years later by S.T.S. Media, which offered 16.38 percent of its shares on the Nasdaq at $14 per share, raising $3.5 billion. The next Russian placement only came five years after that, when leading internet firm Yandex raised $1.435 billion in a Nasdaq I.P.O. — the largest I.T. offering to take place there in 2011.
QIWI C.E.O. Sergei Solonin (center) and his team celebrate the firm’s I.P.O. on May 3.
Solonin, who with 25.4 percent is the company’s largest shareholder, didn’t take part in the placement. A source close to placement participants told Russian business daily Vedomosti that 80 per-
cent of the new investors were from the United States. “QIWI made the top five of Russian companies to conduct I.P.O.s on U.S. exchanges, which is quite a breakthrough,”Romanenko said in an interview with Vedomosti.
Muraviev also expressed satisfaction with the offering: “The expectations of all shareholders have been met,” he said. QIWI is Russia’s largest epayment provider. It maintains a chain of 169,000 payment termi-
nals and kiosks, which operate on a commission basis. Over 40,000 vendors accept more than 39 billion rubles (roughly $1.3 billion) in cash payments monthly from more than 65 million customers.
QIWI also partners with Visa to process digital wallet payments, which currently total 11 million accounts. QIWI digital wallets account for 30 percent of sales and are growing at a pace of 80 percent year-on-year compared to 14 percent growth in the firm’s other business areas, according to financial analysis firm Seeking Alpha. QIWI reported an 88 percent increase in net group income for 2012 to 808 million rubles, or $27 million. QIWI has 52 million shares in total, including 40 million Class A shares (which give holders 10 votes) and 12 million Class B shares (one vote). Twenty-three percent of QIWI’s equity and 2.9 percent of its voting stock went into free-float following the I.P.O. Once the underwriters, which included Credit Suisse, JPMorgan, Renaissance Capital, Robert W Baird & Co., and William Blair & Co., exercise an option for 1.8 million QIWI shares, the free float will reach 26.5 percent of equity and 3.35 percent of votes.
RUSSIA BEYOND THE HEADLINES SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU
MOST READ Reassessing the Caucasus After Boston rbth.ru/25409
A QUESTION OF BALANCE In 1917, when the Bolshevik Party seized power during the Russian Revolution, relations between the United States and Russia were broken off. In 1933, the U.S. established diplomatic ties with the Soviet Union. Eighty years later, former and current
ambassadors from the U.S. and Russia met in Moscow to speak frankly about bilateral misunderstandings, today’s complicated balance of power and the tightrope that diplomats must walk between establishing good will and sending tough messages.
Artem Zagorodnov of RBTH asked four of the diplomats about the future of the U.S.-Russia relationship. Each ambassador was asked the following questions: A famous saying from the Cuban Missile Crisis of 1962 was, “If the world ever comes to the brink
of war, Americans and Russians will always come to an understanding.” How relevant is this today? What advice do you have for the current ambassadors to Moscow and Washington? Here are some of their answers. interpreter.You had to make clear what was often not clear from just some words out of Washington. The second was to be what I called the C.E.O. of U.S.A., Inc., Russia Division. Our government was spending a huge amount of taxpayer dollars here: We were building a space station, the Nunn-Lugar program was working to secure nuclear materials and weapons, we were engaged in a variety of programs ministries and others wanted advice on. I had to oversee that. So it was a big management job. And the third task was to explain to Washington what was going on here, what the views of their government were, what was behind them, how Washington should understand what was happening in a country that was in great flux and change. We were the only ones here on a regular basis. Others would come for a day or week and meet some people and go home. So you represent, you manage and you explain.
Alexander Bessmertnykh WASHINGTON, 1990–1991
lot depends on if the new administration will be a b l e t o s e e U. S . Russia relations as critically important in current affairs. The current level of disagreements arouses disappointment, but not a genuine feeling of worry for our relations. Overall, it’s a normal state of affairs — our relations were never free of problems. Ambassadors to both Moscow and Washington have proven themselves intelligent and successful in the past decades because, with some exceptions, experienced diplomats with a thorough understanding of their new country get appointed to those positions. That’s the feeling I’ve come away with from the meeting with Foreign Minister Sergei Lavrov. Ambassadors and the Ministry of Foreign Affairs are working in unison. I’d suggest current ambassadors don’t try to sugarcoat or ignore difficult parts of the relationship. When difficulties arise, they should address them from the start and not put them off until tomorrow, because they can pile up and become more difficult to resolve. This is important because regardless of how the balance of power changes, our embassy in Washington remains one of the most important foreign posts (if not the most important).
Alexander Vershbow MOSCOW, 2001–2005
he idea that Russia and America“will always come to an understanding”is still very relevant even though the international environment is changing and there are more centers of power. We have to accept that it’s a multipolar world.
Viktor Komplektov WASHINGTON, 1991–1992
The U.S. and Russia still posses very unique characteristics and responsibilities as permanent members of the U.N. Security Council, as the two largest nuclear powers, but also countries that span entire continents — in Russia’s case, two continents. Therefore, we have a global perspective that perhaps other major powers don’t. It doesn’t always work out, but we should be able in future crises to come together for the sake of international peace and stability. I think American ambassadors have a difficult role to play in being both boosters of coopera-
tion and to explain — sometimes very frankly — the political issues that create the disputes in our relationship. They are oftentimes driven by domestic politics. They’re also frequently the function of our values and our national identity. It’s always a delicate balance to be both the advocate (the person who puts the accent on the positive) and the person who delivers the less pleasant messages from time to time. Ambassadors need to be ready to play both roles, and I hope Russians understand the tightrope that American ambassadors have to walk.
James Collins MOSCOW, 1997–2001
he spirit of the Cold War and the nuclear age — which we still live in — is very different today from what it was in 1962. There are two aspects to what goes on between us. First, we will continue to pursue reductions in these [nuclear] weapons. There are always long negotiations involved, there’s theater, but we know we don’t need the number of weapons in existence and they’re expensive to maintain.
The challenge now is that there are a lot of people around — Indians, Pakistanis, Chinese — we’re not sure will know how to manage this. I think therefore our problems are much greater than they used to be. How do we manage these third parties and bring them into this management system? The world’s become much more complicated in the last two decades. As ambassador, I had three jobs I had to do well. The first was to represent my government to Russian government.You had to carry out your instructions, but explain what was going on. You were an
would put it another way. Currently relations between the U.S. and Russia — including in the field of security — are such that both sides practically exclude the possibility of any large-scale military conflicts with their involvement. They should understand the domestic political situation in each country very well as well as its legal base. Most importantly, RussianAmerican relations encapsulate the entire world to a degree, so ambassadors need to keep track of everything happening in the world, especially in conflict zones, and inform their respective governments on how they can respond.
Sergei Rogov SPECIAL TO RBTH
very American president since Harry Truman has at some point during his tenure announced a doctrine reflecting his foreign policy priorities. Barack Obama took the opportunity to do this in his State of the Union address in February. In his speech, Obama indicated that he intends to put the United States at the head of economic blocks constructed around the U.S.’s Atlantic partners and its allies in the Pacific Rim (while at the same time trying to put an end to a decade of war without losing U.S. influence in a multipolar world). The initiative to take on China with a Trans-Pacific Partnership (T.P.P.) is partially a result of economic realities. The U.S.’s share of global G.D.P. has shrunk from 23 to 18 percent over the past decade, while China’s has risen from 10 to 15 percent. Unless the Chinese economic development model hits an impasse, China will catch up with the U.S. in terms of G.D.P. as soon as the end of this decade. China’s economy will be twice as big on an exchange-rate basis by the middle of this century. U.S. National Security Advisor
Tom Donilon has admitted that the White House believes a TransPacific Partnership could help the U.S. to remedy the situation. It is on this basis that Washington is planning to set up a free trade zone in the Asia-Pacific region. If such a zone becomes a reality, the U.S. will account for threefourths of the partnership’s com-
Obama is planning to place the United States at the helm of two giant regional economic coalitions. Although Russia has access to both the Atlantic and Pacific Oceans, it has shown no interest in integration. bined G.D.P., ensuring American dominance within the new economic alliance. At the same time, the partnership is an alternative to the ASEAN+3 arrangement promoted by Beijing, which is a regional economic coalition of China, Japan, and South Korea plus the ASEAN members.
LETTERS FROM READERS, GUEST COLUMNS AND CARTOONS LABELED “COMMENTS” OR “VIEWPOINT,” OR APPEARING ON THE “OPINION” PAGE OF THIS SUPPLEMENT, ARE SELECTED TO REPRESENT A BROAD RANGE OF VIEWS AND DO NOT NECESSARILY REPRESENT THOSE OF THE EDITORS OF RUSSIA BEYOND THE HEADLINES OR ROSSIYSKAYA GAZETA. PLEASE SEND LETTERS TO THE EDITOR TO US@RBTH.RU
It was this situation that led to Obama declaring the partnership a top priority for his administration. Not surprisingly, Beijing’s reaction to Washington’s plan has been extremely negative. “The United States has been strengthening its old military alliances, undermining the fundamentals of peace in South East Asia, fanning territorial disputes between China and its neighbors, establishing a united front against China, forcing the creation of a Trans-Pacific partnership, and derailing the independent regional process of cooperation and integration,”read a piece in the People’s Daily, the newspaper of the Chinese Communist Party. But the Pacific is not the only region affected by the new U.S. strategy. As the globalization process has slowed in recent years, partially as a result of the inability to overcome disagreements between developed and developing countries, the Obama administration has focused on establishing regional economic blocks that comprise most developed democracies in North America and Europe as well as the Asia-Pacific. Obama is thus planning to place the United States at the helm of two giant regional economic coalitions, the Transatlan-
WHERE IS RUSSIA’S PLACE IN OBAMA’S NEW WORLD ORDER?
tic and Trans-Pacific Partnerships, which account today for 20 percent of the world’s population, 65 percent of global G.D.P. and almost 70 percent of global exports. China looks rather modest compared to this: it has 19 percent of the world’s population, 15.8 percent of its G.D.P., 7.5 percent of capitalization, and 10 percent of exports. Even taking into account China’s growth down the road, Beijing would still trail far behind the two U.S.-led regional coalitions. This should secure a solid leadership position for Washington in the polycentric system of international relations. This long-term U.S. strategy, however, could fail unless the Obama administration manages
THIS SPECIAL ADVERTISING FEATURE IS SPONSORED AND WAS PRODUCED BY ROSSIYSKAYA GAZETA (RUSSIA) AND DID NOT INVOLVE THE REPORTING OR EDITING STAFF OF THE NEW YORK TIMES. WEB ADDRESS HTTP://RBTH.RU E-MAIL US@RBTH.RU TEL. +7 (495) 775 3114 FAX +7 (495) 988 9213 ADDRESS 24 PRAVDY STR., BLDG. 4, STE 720, MOSCOW, RUSSIA, 125 993. EVGENY ABOV PUBLISHER LARA MCCOY MANAGING EDITOR ARTEM ZAGORODNOV EXECUTIVE EDITOR, U.S. EDITIONS ELENA BOBROVA EDITOR, U.S. EDITIONS OLGA GUITCHOUNTS, ANNA SERGEEVA U.S. REPRESENTATIVES ANDREY SHIMARSKIY ART DIRECTOR ANDREY ZAITSEV HEAD OF PHOTO DEPT MILLA DOMOGATSKAYA HEAD OF PREPRINT DEPT MARIA OSHEPKOVA LAYOUT
to overcome the existing disagreements with its allies and partners. The differences between the economic interests of Washington and its allies can be bridged, but doing so will require mutual concessions, something neither the U.S. nor is partners seem ready for at the moment. What is Russia’s place in such a configuration of international relations? Russia’s“critical mass”is small; the country has only about 2 percent of the global population and 3 percent of the world’s G.D.P. While this share would grow in the event of successful Eurasian integration, it would still lag far behind the global giants. Geopolitical and geoeconomic loneliness within a new system
of international relations is fraught with big risks. Although just like the United States, Russia has access to both the Atlantic and the Pacific Oceans, it has shown no interest in integration processes in either the West or the East. It is necessary to look for a way out of this situation. Thanks to its geographical position, Russia could become the continental link between the Pacific and Euro-Atlantic integration efforts. Sergei Rogov is director of the Institute for the U.S.A. and Canada of the Russian Academy of Sciences. rbth.ru /25303
AN E-PAPER VERSION OF THIS SUPPLEMENT IS AVAILABLE AT HTTP://RBTH.RU. TO ADVERTISE IN THIS SUPPLEMENT, CONTACT SALES@RBTH.RU. © COPYRIGHT 2013, FSFI ROSSIYSKAYA GAZETA. ALL RIGHTS RESERVED. ALEXANDER GORBENKO CHAIRMAN OF THE BOARD. PAVEL NEGOITSA GENERAL DIRECTOR VLADISLAV FRONIN CHIEF EDITOR ANY COPYING, REDISTRIBUTION OR RETRANSMISSION OF THE CONTENTS OF THIS PUBLICATION, OTHER THAN FOR PERSONAL USE, WITHOUT THE WRITTEN CONSENT OF ROSSIYSKAYA GAZETA IS PROHIBITED. TO OBTAIN PERMISSION TO REPRINT OR COPY AN ARTICLE OR PHOTO, PLEASE PHONE +7 (495) 775 3114 OR E-MAIL US@RBTH.RU WITH YOUR REQUEST. RUSSIA BEYOND THE HEADLINES IS NOT RESPONSIBLE FOR UNSOLICITED MANUSCRIPTS AND PHOTOS.
MOST READ Novelist Akunin to Write History of Russia rbth.ru/24897
RUSSIA BEYOND THE HEADLINES SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU
Fiction Novelist translates her experience as a Russian emigrant into success in English
From Romance Novels to ‘Tales of Food and Love’
Coming Soon: Russian Theater in Moscow in English
A labor of love HER STORY
Lara Vapnyar NATIONALITY: RUSSIANAMERICAN AGE: 42
Lara Vapnyar emigrated from Russia to the U.S. in 1994. She is the author of two short-story collections and a novel. In 2004, she won the National Foundation for Jewish Culture’s Prize for Jewish Fiction by Emerging Writers, and that same year was a finalist for the New York Public Library’s Young Lions Fiction Award. Her work has appeared in numerous publications, including The New Yorker. She teaches creative writing at N.Y.U.
Unable to find a job after moving to the United States, Lara Vapnyar began writing as a form of therapy. Eventually, it became a career. XENIA GRUBSTEIN SPECIAL TO RBTH
Lara Vapnyar hardly spoke any English when she emigrated to the United States in 1994 at the age of 23 and three months’ pregnant. The experience was marred by morning sickness and the difficulties of immigrant life:“I hated everything,” she said in a recent interview. She had the idea when she came to America she would get a “wonderful, exciting, amazing job,” she said, adding, that she “couldn’t find any job ... I started writing by accident.” From the very beginning, Vapynar began to write in English — a language she was still learn-
ing. Her English quickly became lyrical, and she realized she was a natural storyteller. She began writing about the Russian Jewish émigrés she knew. Life as a young immigrant and new mother was hard work, but writing as “therapy” turned out
to the magazine’s editors. The New Yorker published her short story “Love Lessons Mondays, 9 A.M.,” about a young teacher charged with a sex education class, on June 13, 2003. “I had no clue what The New Yorker was,”Vapnyar said.“Usu-
Vapnyar said the way she learned to to write in English was by reading a lot and watching movies.
“I learned English watching ‘Pretty Woman.’ I saw it so many times, until I understood everything.”
to be much more promising than she had imagined. She studied international literature at the City University of NewYork (CUNY) where her professor, Louis Menand, a staff writer for The New Yorker, noticed her literary talent and asked if he could show one of her stories
ally young writers work a lot to achieve it; they go through ups and downs; at some point, they inevitably lose their hope and such. I only realized retrospectively how important this was for me. Since I didn’t know what it [The New Yorker] was, I wasn’t even worried.”
Vapnyar said the way she learned to write in English was by reading a lot and watching as many movies as possible. She noted that even very simple books such as romance novels can be very helpful. “The kind you can buy at a pharmacy. They are very simple, even silly. Their language is very understandable; it’s easy to read and at times you even feel more educated than the author” she said. “So it makes you very selfconfident, and then you can move on to more complicated writers. “I don’t know why this film, but I learned English watching ‘Pretty Woman.’ I saw it so many times, until I understood every bit of conversation. It was 17 years ago, so I owe Garry Marshall big for my English.” Vapnyar’s collection of stories, “There are Jews in My House,” was published by Pantheon Books in 2003.“Memoirs of a Muse,”her first novel, was published in 2006, and a collection called “Broccoli and Other Tales of Food and Love” was published in 2008. Vapnyar said she has a soft spot for her Russian fans. When she first found out that she was published in Russian, she“was happy, but in a very different way. It was not the same feeling I had when I was told that my books are being translated into any other languages. It was like coming back to my childhood, a very warm and touching feeling.” But, she added, criticism from Russians stings more. “Because I’m still Russian, Russians’ opinion is that of someone close, and particularly significant,”she said. Yet the author doesn’t visit Russia very often. Over the last two decades, she’s visited only twice. Vapnyar is currently working on a new novel called“Secrets of Staten Island.” She also teaches creative writing at NewYork University and Columbia University. And while she values anyone who still wants to pick up a novel in this day and age, she wants readers to choose her work because of her themes and not her background. “I hope the readers read my stories not because they are wondering whether we are eating Russian salad for New Year’s Eve, but because of some deeper things — such as, what people feel, how they fall in love, how they fall out of love.”
Poetry In a starving, suffering city, verses helped people stay alive
Sharing the Siege Mentality In January, Russia marked 70 years since the siege of Leningrad was broken. Survivors have noted the role of literature, particularly poetry, in helping them survive.
Olga Berggolts (left) broadcast her poems to fellow residents on the radio. Famous Russian poet and Leningrader Anna Akhmatova also wrote important verses about the siege.
As the city of Leningrad (now St. Petersburg) began its long recovery from the Nazi’s 900-day siege during World War II, people would greet poet Olga Berggolts on the street and thank her for the poems they said helped them to make it through the ordeal. Berggolts lived in the city during the blockade and broadcast her poems to bolster the populace. Knowing that she was on the other end of a microphone, barricaded like them, gave Leningraders something resembling hope since, after all, amid shelling and starvation, she was still writing poems. In a film called “Day Stars,” (Igor Talankin, 1968) Berggolts is depicted as reciting to soldiers: “Mother worries, grieves/ What should I write my distant mother?/ How to reassure her/to lie?” By the end of the poem, however, she shows no fear, only resolve. Berggolts decides not to protect her mother. Rather, she decides to tell “the truth.” The poet, a charismatic beauty in her early thirties, broadcast her poems over the only radio station operating during the siege. Her grave but mellifluous voice flowed straight into their homes during one of the worst wartime ordeals for citizens in history. Berggolts was inspired and influenced by the already-revered Anna Akhmatova, who also wrote poems from Leningrad and bore witness to the first artillery shell-
NORA FITZGERALD RUSSIA BEYOND THE HEADLINES
What was the Siege of Leningrad? On Sept. 8, 1941, Nazi troops severed the last land line between the Soviet city of Leningrad and the rest of the world. For the next three years, the German Army Group North and supporting Finnish forces maintained a blockade and subjected the city to constant bombardment. In January 1942, the city’s
food rations reached an all time low of only 125 grams (about 1/4 of a pound) of bread per person per day. In the first two months of 1942, 200,000 people died of cold and starvation. Overall, more than 640,000 civilians died before the siege was officially lifted on Jan 27, 1944.
ing of the city, even though she was evacuated in 1941. “A rainbow of people running around/And suddenly everything changed completely,”Akhmatova
wrote. (The full poem is included in Anna Akhmatova’s “Poems,” translated by Lyn Coffin with an introduction by Joseph Brodsky.) Many less-famous women also
acted as scribes for the city, keeping diaries and journals and writing poems, in part to save themselves from insanity, and in part to make sense of the horror around them. Some of them are published in English, including Vera Inber’s “Leningrad Diary.” Inber almost died of starvation, but still managed to describe her life.
Days and Years of Hardship Berggolts, like Akhmatova, endured many dark days long before the Leningrad Siege. She was pregnant with her third child when she was arrested by the N.K.V.D., the secret service, and lost her child during interrogations in 1937. Family members were imprisoned and executed, and her two young daughters died before the war. Her powerful poem “The Trial,”documents the effect of the brutal purges in the years before the siege. Her most famous works from the time of the blockade, “Leningrad Notebook”and“Leningrad Poems” are available in Russian, although it is almost impossible to find her poems today in English. “And this was as arid as hell ever got,”Akhmatova wrote about Leningrad in 1941. One of Akhmatova’s themes before and during the war was her survivor’s guilt — she became, for Russians, their “Muse of Wailing.” Yet Brodsky noted that in Akhmatova’s poems about the dead, she was the most disciplined, and did the least “howling,”in their honor. Berggolts’ war poems also showed an incredible discipline, as if the most restrained voice was needed in the face of terror impossible to grasp.
John Freedman THE MOSCOW TIMES
ver the decades, I have had countless conversations with foreigners in Moscow who claim to love theater but who do not attend shows because they don’t understand Russian. My standard response is always the same: You don’t need to understand Russian to understand Russian theater. It is an extremely expressive art form — the acting, the lighting, the design and the innovative work of directors all form a rich, parallel language through which the basic story of any performance is told, whether or not you understand the words being spoken. Now, this doesn’t mean anyone agrees with me, especially directors. I never spoke with Pyotr Fomenko on the topic, but the director and founder of the Fomenko Studio, who died last August, is the source of a particularly pithy quote that makes it clear what he would have thought of my optimism.“Theater in a foreign language,” he said, “is like a kiss through a pane of glass.” Funny, yes. Convincing even. But it may no longer be true if, of all theaters, the Fomenko Studio has its way. A new system of subtitles and oral translation of performances aimed at making Russian theater accessible to speakers of other languages was recently unveiled by a team headed by Fomenko Studio managing director Andrei Vorobyov. When the system is fully functional, which Vorobyov expects to happen within two years, the subtitles and translations will be delivered directly to spectators via a hand-held electronic tablet. A simple program will allow users to select the language of their choice — Russian, English, French or German. Translations of the show’s spoken dialogue will appear on the tablet in real time in discrete white lettering on a black background.
For those who prefer to hear the text spoken in their chosen language, headphones attached to the tablet will make that possible. Subtitles for a handful of Fomenko’s most popular productions are already available in French and English, including “Family Happiness,”“Three Sisters” and “War and Peace.” The goal at present is to make all of Fomenko’s productions available, after which the remainder of the theater’s offerings will be fitted with translated subtitles, both printed and spoken. Vorobyov explained that the project’s target audience is nonRussian speakers, but he added that there are other beneficiaries
Within two years, subtitles and translations will be delivered to spectators via an electronic tablet. as well. For example, hearingimpaired spectators already are using the tablets in order to see the Russian-language text. The idea for an innovative system of subtitles originally arose in connection with the Fomenko Studio’s frequent tours abroad. “We wondered how you avoid hanging a screen on stage that will hinder an audience’s perception of the show,”Vorobyov said. The result was FOMA, a complex combination of hardware and software named in honor of Fomenko that was developed by the theater in conjunction with a company called Compile Group. However, when it became evident that, in modified form, the system could be used in Moscow, the city’s Culture Committee provided a 3 million ruble ($95,000) grant to purchase and modify equipment. Moreover, it is equipment and knowledge that can be used at any theater. “We are not greedy,”Vorobyov said.“We have lent this system to several theaters and festivals and we will be happy to do more of that in the future.”
A gripping journey from Mississippi to Moscow Phoebe Taplin SPECIAL TO RBTH
TITLE: THE BLACK RUSSIAN AUTHOR: VLADIMIR ALEXANDROV PUBLISHER: ATLANTIC MONTHLY, NY
ot many people have heard of Frederick Thomas yet, but his story is surely destined for the big screen. This true tale of the son of former slaves who became one of Moscow’s richest early 20th century entrepreneurs is delightfully unexpected. Vladimir Alexandrov, a professor of Slavic Languages and Literatures at Yale University, spent years researching Thomas’s extraordinary adventures and produced a pacey and readable account of them in his book, “The Black Russian.” Thomas was born in Mississippi in 1872 to former slaves. After his father was violently murdered, Thomas left home at the age of 18 and first worked as a waiter in Chicago. Alexandrov reconstructs his subsequent journey, which took him through New York and London, Paris, Berlin, Monte Carlo andVienna before he settled in Moscow. Thomas ran a hugely successful entertainment complex in the Aquarium garden near the city center as well as other theaters and restaurants. Fleeing the Russian Revolution, he began again in Turkey and had become Constantinople’s “Sultan of Jazz” when the tides of history swept him under once more. The memoirs of a popular Russian singer of those times mention: “Our famous Russian Negro Fyodor Fyodorovich
Thomas, the owner of the famous ‘Maxim’ in Moscow.” This brief reference to Thomas, who had Russianized his name, was the first time Alexandrov encountered the theme that was to become an obsession. The professor spent a year’s sabbatical researching Thomas, finally unearthing two dossiers about him in the National Archives outside Washington, D.C. Thomas often reinvented himself and freely altered or embroidered his own backstory, which made Alexandrov’s research more difficult. For one thing, Thomas took Russian citizenship in 1915, which meant, according to Alexandrov,“he had to lie to the American consul in Odessa in 1919 to be able to escape from the Bolsheviks to Constantinople.” During his research, Alexandrov went to Paris and met Thomas’s grandson, who believed his grandfather was a Native American smuggler called Tomac who saved a rich Russian in a Shanghai bar. Alexandrov said:“Frederick Thomas’s real life trajectory is actually more remarkable … because it shows how far he had to travel — in all senses …” Alexandrov, who has previously written about Vladimir Nabokov and Leo Tolstoy, said he is drawn to fascinating individuals living through turbulent times, especially Russia between 1900 and 1925. “Events in Russia during those years determined the fate of much of the world during the 20th century,” he said. Find out more online! Explore Russian literature through reviews, podcasts and multimedia. rbth.ru/ read_russia
RUSSIA BEYOND THE HEADLINES SECTION SPONSORED BY ROSSIYSKAYA GAZETA, RUSSIA WWW.RBTH.RU
MOST READ Natalia Vodianova: Steve Jobs Inspired My Charity rbth.ru/24051
Charity While donating old clothes to thrift stores to help the needy is common in the U.S., in Russia this concept is only three years old income families, orphans and people with disabilities.
“We want to clothe the whole city”
PRESS PHOTO (3)
Valery Koverchik helps a customer in Yekaterinburg’s Da Ra Shop (left). Moscow’s Lavka Radostei thrift store hosted a party to celebrate its opening in July 2012 (right).
Learning to Give, One Item at a Time Thrift shops are now open in Moscow, St. Petersburg and Yekaterinburg, but opinion polls show that Russians still find the concept hard to comprehend. TATYANA MARSHANSKIKH SPECIAL TO RBTH
When Valery Koverchik decided to openYekaterinburg’s first thrift shop about 18 months ago, he spent all the money he had saved to buy a car redecorating and outfitting the small, spare storefront he found. “I went to my day job at 7 or 8 a.m. in order to finish by lunchtime and go to my shop. I got home about 10 p.m.,” Koverchik said.“I lived like that for several months.” Finally the day of the grand opening arrived.The bare concrete walls lit only by a single light bulb had been transformed. Inside the store, which Koverchik named the Da Ra Shop, clothes hung neatly on racks and tea and cookies were prepared for the guests. But no one showed up. Not a single per-
son Koverchik had invited either personally or through social networks showed any interest. “The word ‘charity’ scares away many Russians.When people hear it, they think: ‘Now they are going to ask for something,’”Koverchik said. But Koverchik persevered and today the shop has more than 1,500 fans on social media who support its work by visiting the store or ordering goods online. Although the profits are modest, the store is no longer in the red. Koverchik donates the money that remains after paying rent and utilities to a local animal shelter. All of Russia’s 17 thrift stores are private initiatives, typically run by energetic young people looking to better the world around them. The stores do not benefit from preferential tax legislation and often have to structure their operations in ways that adhere to the letter of the law, rather than the spirit of their initiatives. According to Polina Filippova,
St. Petersburg’s Spasibo shop is also a venue for lectures and concerts.
the director of the Russian branch of the U.K.-based Charities Aid Foundation (C.A.F.), “The problem is that the attitude to the idea of charity in Russian society leaves a lot to be desired.”For the majority of Russians, charity means giving alms to a beggar in the subway; they are suspicious of organizations working
charity shops operate in Russia today. They are typically run by energetic young people looking to better the world around them.
in this sphere.“And nonprofit organizations are under tough government control,” Filippova added.
Second-hand capital Moscow’s Lavka Radostei (Joy Shop) doesn’t officially sell goods at all; rather, it exchanges them for donations. This is one of the conditions of the shop’s existence since legally it is a charity. Visitors to the shop select items and then suggest the price they are willing to pay. Owner Yekaterina Bermant has been surprised at the amount and quality of donations that make their way to the shop. Lavka Radostei’s donors are typically members of Moscow’s upwardly mobile middle class who bring in namebrand goods. Bermant along with sales attendant Maria Timofeyeva make sure that valuable designer items don’t go for too little. “I recommend that people think of the price of a similar item new and then give 20–40 percent of the cost for the second-hand piece,”Timofeyeva said. Lavka Radostei takes in about $8,000 a month. The money is then transferred to Vse Vmeste (All Together), a nonprofit umbrella group for Moscow’s grassroots charity and volunteer organizations. Vse Vmeste’s operating council then distributes the money among 30 funds, including those working with low-
Russia’s first thrift store, Spasibo (Thank You), opened three years ago, in St. Petersburg. The store was the brainchild of Yulia Titova, who got the idea after a visit to the U.K., where charity shops are common. “My friends and I were fresh out of university and were full of ideas: ‘Charity shops! Great! They make for a better world!’ Titova said. “But we had no idea of the legal niceties. It was only three months after we opened Spasibo that we realized we had to pay taxes.” Today Spasibo has expanded into two shops and a distribution center. The shops have also become a venue for master classes, exhibitions, concerts and book exchanges. In the average month, Titova’s team receives between four and eight tons of dresses, jackets, footwear, books and toys. Only about 10 percent of these items end up being resold. The rest are given away for free. Those in need can visit the shop to select items three times a week. The slogan on Spasibo’s social network page reads: “We want to clothe the whole city.” Titova now dreams of quadrupling the net profit from the two shops to $12,000 a month. Her other dream is to gradually educate people in Russia that their old clothes can be used again and again. She believes that people aren’t opposed to the idea of charity; they are just unaware of the many ways they can contribute to helping others. “Russians are prepared to do good; they are no different in that way from other people,” said C.A.F.’s Filippova. Although increasing the number of charity shops from zero to 17 in three years is a significant accomplishment, much remains to be done. The C.A.F. World Giving Index, which ranks countries according to the percentage of people who donate money to charity, volunteer their time and help a stranger, rated Russia 127 out of 160 countries worldwide in 2012. This was already a bump up for Russia, however. The country was ranked 138th in 2011.
Volunteers In Moscow, spring cleaning can mean painting fences in the local park
Reviving a Soviet Tradition In late April, when Russia’s snows finally melt, volunteers motivated both by environmental concerns and historical example turn out to clean up public spaces. YULIA PONOMAREVA
Find news from Russia in your inbox!
Valentina Volchenkova, 20, a student and part-time barista, was one of 460 volunteers who turned out for a corporate subbotnik at the Muzeon Park of Arts in central Moscow on April 20. “Almost everyone wanted to take part,”Volchenkova said,“but we can’t close the coffee house for the whole day, so we agreed that some would work today and some would come next week.”Her firm scheduled a second work day for April 27. Roman Sablin, founder of GreenUp, a firm that promotes environmental consciousness and sustainability, said that he is seeing more Russian companies organize subbotniks as a new type of team-building activity. “Forward-looking companies eye ‘green’ events as a way of additionally motivating their personnel,”said Sablin.“They are all tired of paintball and clubs. They want some good and creative activity.” The revival of subbotnik combines the idea of environmental protection, which has been slow to catch on in Russia, with a concept familiar to most Russians either from their own experience or that of their parents and grandparents. “It is an indicative example — a network campaign based on Western values, including sustainable development,”said environ-
RUSSIA BEYOND THE HEADLINES
What is a Subbotnik? Subbotniks, or voluntary labor days organized for cleaning the streets of trash on spring Saturdays (“Subbota” means Saturday in Russian), first appeared about 100 years ago. According to legend, the original subbotnik in 1919 was initiated by Bolshevik leader Vladimir Lenin and was attended by 15 volunteers; a year later, the turnout was 425,000. During the Soviet era, subbotniks were a mass phenomenon and attendance was often mandatory. Although participation dropped following the collapse of the Soviet Union, in recent years more and more people are turning out to paint fences and plant flowers.
Cleaning parks and planting flowers are traditional subbotnik actvities.
mental marketing expert Olga Borte. Besides corporate subbotniks, there are volunteer events organized by communities of enthusiasts. One such movement, called No More Garbage, is now active in 100 Russian cities. Denis Stark, 35, who founded the movement, said:“It started in our courtyard, where street sweepers cleaned the parking and driving area roads, but no one cleaned the children’s playground. We wanted to make it clean and cozy and look nice.” In 2004, he held the first event in his native St. Petersburg. The eight organizers were joined by
10 people. Stark paid for a truck to remove the waste. In 2010, the first subbotnik organized by the movement was attended by 1,500 people; in 2009, there were 9,000; and in 2012, there were 85,000. Events are organized and announced through social networks, flyers in the subway and preliminary meetings in addition to traditional advertising. In September, No More Garbage will once again hold its allRussian subbotnik as part of the global World Cleanup 2013 initiative.
SUBSCRIBE to top weekly news
18 September NEXT issue