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Wednesday, June 12, 2013


Special Report Russia Day - from independence to pomp and ceremony P.04-05



Special supplement from Rossiyskaya Gazeta (Moscow, Russia) which takes sole responsibility for the contents.

Culture New world-class Mariinsky theatre opens in St. Petersburg P.07


Diplomacy Moscow is eager to resolve a series of international issues

Economy Tatarstan in focus at AIM 2013

Innovation centres to reap benefits of UAE investment UAE investors plan to invest hundreds of millions of dollars in the development of the Kazan Smart City technopark in Russia's Republic of Tatarstan. YEKATERINA POKROVSKAYA


Putin's agenda for G8 While the G8 summit that opens in the UK on June 17 will formally deal with global economic issues, Syria is certain to top the informal agenda. Vladimir Putin will personally represent Russia. ALEXANDER GABUYEV KSENIA SMERTINA SPECIAL TO RBTH

As recently as the beginning of this year, RBTH’s diplomatic sources expressed doubts that Putin would attend the summit in Northern Ireland. Medvedev

in Northern Ireland are behindthe-scenes discussions rather than the official agenda. The Kremlin expects Syria to become one of the key issues. Russian and Western positions on Syria have begun drifting closer together. The US Administration’s National Security Advisor, Tom Donilon visited Moscow in April, followed by US Secretary of State John Kerry. Putin discussed the “Syrian problem” with UK Prime Minister David Cameron in May in Sochi. As a result,

was expected to go instead. However, Putin has decided to personally attend the event. Moscow is interested as never before in collective efforts to resolve international problems, not least because Russia will host a G20 summit in St. Petersburg in September and will assume the chairmanship of the G8 in 2014. The UK has declared global economic issues to be the main theme for its G8 chairmanship. Russian officials have pointed out, however, that Moscow’s top priorities

it has been decided to hold a peace conference on Syria in Geneva. Under such circumstances, according to RBTH sources, at the very least Russia will seek support for the idea of a Geneva conference from all G8 members at the summit as well as the inclusion of this point in the leaders’ final communique. At the most, its objective will be to agree on a common action plan to prevent a fullscale civil war in Syria. CONTINUED ON PAGE 2

Gulf investors are planning to invest vast sums in one of Russia’s most innovative technoparks, Smart City in Kazan. UAE and Russian executives made the announcement at the Third Annual Investment Meeting in Dubai in May. In Dubai, the Tatarstan Investment Development Agency (TIDA) and the Tatarstan-Gulf Investment Corporation (TGIC) signed a memorandum of understanding to create a consortium of government and semi-government investors from the Gulf. Speaking at the exhibition, Rashed Karmastaji, chairman of Karmastaji Group, who will lead the new consortium, said that the plan for the first, $2.5 billion stage of Kazan Smart City’s development, to be completed by 2016, will be ready by the end of June. Investment in the first stage will reach “hundreds of millions of dollars,”Mr Karmastaji said, adding: “The project’s payback period will be five to 10 years.” “The ultimate goal of developing Kazan Smart City is to increase the service industry share in our gross regional product,” LinarYakupov, chief executive of TIDA, told RBTH. The agreement is being seen as



$1 billion has been invested in the Alabuga Special Economic Zone.

a success for Rustam Minnikhanov, Tatarstan's president since 2010, who has made his republic of 3.8 million people, with its mixed population of Muslims and Christians, one of Russia's most investment-friendly regions. Tatarstan's Alabuga Special Economic Zone has already attracted $1 billion in foreign direct investment since its establishment in 2006. The industrial zone, which is currently the largest of its kind in Russia, has attracted 33 international investors, including Ford Motors, Rockwool, Tatneft, and 3M, among others. Alabuga offers a corporate tax rate of just 2 per cent, while land and property is zero-rated. Similar tax breaks are planned for Kazan Smart City and Innopolis. CONTINUED ON PAGE 3

Football The Moscow team secure the title with a match to spare

YOUR ULTIMATE SOURCE CSKA defy expectations to for reliable information about Russia! win Russian Premier League Politics&society | Economy | Opinion | Science&technology | Culture&living | Sport | Multimedia Champions for a fourth time, the club's achievement is all the more precious because it comes at a time when it's dominance seemed to be on the wane. ALEXEI MOSKO RBTH

league title in autumn 2012 seemed to be St. Petersburg's Zenit, title winners for the last two seasons. Anzhi Makhachkala also appeared to be strong, with stars like Samuel Eto’o and Lassana Diarra. CSKA were not willing to spend tens of millions of euros on new stars, instead focusing on finding talents in the lower leagues. The club’s scouts found two Swedes in the Dutch league – Pontus Wernbloom and Rasmus Elm, who turned the midfield into an impenetrable fortress. CSKA scouts also found the gifted Nigerian Ahmed Musa in the Netherlands. At the most critical point of the season, he came in for the best forward on the team – the injured Seydou Doumbia. CSKA didn’t get off to the best of starts this season: their Europa League campaign was a complete flop, with the club dropping out in the play-off round in August.

CSKA dominated Russian soccer at the beginning of the 2000s, winning the Premier League title in 2003, 2005 and 2006, and the UEFA Cup in 2005. By contrast, the 2012-13 CSKA outfit was not fancied to win anything. The main challengers for the


CSKA's title was in part due to astute activity in the transfer market.


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Lavrov: Syria conference requires caution In an interview with Rossiyskaya Gazeta, Russian Foreign Minister Sergei Lavrov spoke about preparations for the upcoming conference on Syria, the problem of security in the Arctic and the state of US-Russia relations.

Hasty action is inadvisable, says Sergei Lavrov (right), pictured here with US Secretary of State John Kerry.

in Geneva on June 30, 2012 will automatically take part. However, Iran and Saudi Arabia were not in Geneva a year ago. The Iranians were blocked by our American partners and the Saudis were not invited as a kind of compensation for the absence of Iran. We felt at the time that it was a kind of childish swap and not a very serious approach. Let us make up our minds: either we want an absolutely representative compo-

sition of participants from the point of view of the task to influence all the parties in Syria, or we will sacrifice the success of the conference to personal ambitions and grudges. Do you really believe that the stalemate over the Syrian problem can be resolved within the few days that the new conference will be held? Some of our partners – and John Kerry also mentioned it – believe

that several days or a week would be enough. I think that is counterproductive.The conferences that in the past brought peace in the region lasted months and even years. I do not want to see the same thing happen in Syria. It is counterproductive to set any artificial deadlines. Russian-American differences over Syria boil down to the key question: What should happen first, the res-

You attended a session of the Arctic CouncilinKiruna,Sweden.TheWestern countries repeatedly criticised Russia for attempting to unleash an arms race in the Arctic. What is your answer to these charges? The countries that have northern borders must ensure their security, including in the northern region, like in any other part of their territory. It would be naïve to imagine that because we are talking about the Arctic this principle does not apply. Our strategy of Arctic development, as one of the key areas, envisages the broadest and most intensive international cooperation. Vladislav Vorobyov Rossiyskaya Gazeta

Putin's agenda for the G8 CONTINUED FROM PAGE 1

What other issues will be on the table?

Talks with US The Kremlin has particularly high hopes for Russian-American talks. Putin and Obama will have a bilateral meeting that will pave the way for their dialogue in St. Petersburg. Vladimir Orlov, President of Moscow’s PIR Centre, believes that “Obama is in the mood and has the drive to develop a strategic and economic dialogue with Russia. Perhaps the low point of bilateral relations is behind us.” Indeed, a positive trend has emerged after last year’s coolingoff. The discussion in Northern

The Kremlin has big concerns regarding UK Prime Minister David Cameron’s initiative for a common global standard for resource-extracting companies to report all payments to governments, and for governments in turn to report such revenue. Some Russian officials fear that the initiative could be aimed at companies in Russia and China, and therefore any agreement would require a thorough analysis. The idea of establishing a standard for data exchange among the tax authorities

of different countries would be far more welcome. The subject of the ongoing crisis in the eurozone, especially in light of recent events in Cyprus, will also be important. “It looks like Germany has some kind of clear-cut action plan of its own, which they have yet to make public but have already started implementing. That’s why it’s important for Russia to understand what will happen in the EU,” says Fyodor Lukyanov, editor of the journal Russia in Global Affairs.


The pressure on Assad is growing Andrei Ilyashenko JOUNALIST

The United Nations is putting pressure on Syria. On 16 May, Saudi Arabia and Qatar drafted a new resolution by the UN General Assembly to condemn Damascus. The resolution was supported by 107 countries, while 12 countries, including Russia and China, voted against, and 59 countries abstained. The threat of the direct use of force is just as important. Evidence that Damascus has used chemical weapons could be reason enough to begin an international military operation, although, as was the case with Iraq, no proof may be required. The sword of Damocles is hanging over Al Assad’s head, and there is a good chance that no UN Security Council resolution will be required. This became clear after the Israeli strikes in Syria. Turkey is also threatening Damascus, believing that Syrian intelligence is behind the 11 May attack in the town of Reyhanlı. Thus, the consequences of intractability are clear to Al Assad. However, if applying pressure to the president becomes the key argument during the Geneva talks, there will be no peace in Syria any time soon.

Ireland will likely focus on the issues Obama addressed in a letter that Donilon conveyed to Putin. In this case, the dominant theme will be nuclear security. The contents of the letter indicate that he hopes to announce in St. Petersburg the beginning of new negotiations on nuclear arms cuts. Other security issues are expected to be discussed, such as the Nunn-Lugar Cooperative Threat Reduction Programme, under which the US has been paying since the early 1990s to dismantle excessive stockpiles of Russian nuclear and chemical weapons. Missile defence is another security-related issue. Washington has proposed signing an additional agreement stating that its system is not targeted at Russia, but this would be only valid for the Obama administration, while Moscow is demanding more solid guarantees.

Legislation Religious feelings will be protected by law under new proposals

Authorities to punish sacrilegious acts A bill introducing sentences of up to three years in prison for acts that insult religious feelings is making headway in the Russian parliament. YULIA PONOMAREVA RBTH ASIA

Five weeks after three members of punk band Pussy Riot were sentenced to two years each on hooliganism charges for singing their “Holy Virgin, chase Putin away” song inside Moscow’s Christ the Saviour Cathedral, the four State Duma parties have introduced a bill“to counter insults to religious convictions and feelings.” On May 21, three-quarters of the lower house of parliament passed the bill in its key second reading. In response to criticism, lawmakers reduced the proposed maximum sentence for “public acts express-


But there are other stakeholders – Iranforexample – withoutwhomthe conference is unlikely to succeed. Everybody seems to agree that those who attended the meeting

On the subject of Russia and the US, President Barack Obama will shortly receive an answer to the message he sent Russian President Vladimir Putin. What next? We must proceed step by step. Barack Obama sent a message to Vladimir Putin. The Russian president has considered it and will set forth his views on the key problems in our relations, including ballistic missile defence, strategic stability and all the factors that influence it. We will then wait for the reaction to our reply. PHOTOSHOT/VOSTOCK-PHOTO

Is it possible that the proposed conference on Syria could become a trap for Russia? If it fails, the Americans will say: “Let us now do it our way.” It can be a trap only if the parties act in haste. To begin with, the key parties must come to an agreement. The Syrian government has said it is ready, and on the whole it has reacted in a construc- tive way, although it has suspicions as to whether the opposition will want to agree without preconditions, as stipulated in the Geneva Communique. All groups of the Syrian opposition must be represented at the conference, including those acting outside Syria. We are working on that; we are sending signals to all the opposition groups. We have more influence over some of them than others. Some are much more influenced by the West, the Arabian Gulf countries and Turkey. So there should be a division of labour.

ignation of Al Assad or peace negotiations? The United States has signed on to the Russian-American initiative of May 7, which has no preconditions.

The new law has sparked debate about the role of religion in Russia.

ing clear contempt for society” performed, for instance, in a church or a mosque “with the purpose of insulting religious feelings of religious people” - from five to three years. The bill also proposes fines

of up to 500,000 rubles ($16,000) and community service. “The public is very negative about the desecration of holy sites, and there is a demand for safeguarding the feelings of religious

people. For example, the Pussy Riot ‘demarche’ has been condemned by the vast majority of Russians, regardless of their religious views,” Duma deputy Tamerlan Aguzarov was quoted by the United Russia party’s press service as saying. A total of 45 per cent of Russians would like to see sacrilegious acts prosecuted criminally, a survey conducted last September by a major Russian pollster, Public Opinion Foundation, showed.Twenty-two per cent of respondents disagreed. The Kremlin supports the idea. “It’s a very complex law to execute, but it’s absolutely necessary in our multiethnic country where multiple religions coexist,” said President Vladimir Putin’s spokesman, Dmitry Peskov. 23435



Energy Gas exporters set their sights on Asia

Events The "Russian Davos" is all set to go

Moscow aims for global LNG market

Agenda set for St. Petersburg Economic Forum

Russia wants to win 10-15 per cent of the global market for liquefied natural gas (LNG) by 2020 by liberalising its export policies and luring private sector investment to new projects.

Russia’s major business and political event – the 17th St. Petersburg International Economic Forum – has been scheduled for June 20–22, with over 5,000 participants expected.

Speaking in early 2013, President Vladimir Putin said that the Russian treasury was losing tens of billions of rubles because gas exports were falling. He also cited projections for global growth in demand for gas, especially in Asia.




The Asia-Pacific markets are seen as the main destination of future Russian LNG exports. Russia currently produces about 10m tonnes of LNG every year, which is only 4.5 per cent of global sales (240m tonnes in 2012). Global demand for LNG is projected to reach 380m tonnes by 2020, by which time Russian companies hope to have increased production capacity to 35m-40m tonnes.

So far, Russia has launched only one LNG plant, as part of the Sakhalin-2 project, which is coowned by Gazprom (50 per cent +1 share), Shell (27.5 per cent), Mitsui (12.5 per cent) and Mitsubishi (10 per cent). The output of the plant, which is located on Sakhalin Island in Russia's far east, is destined for Japan (63.9 per cent), South Korea (16.17 per cent), and the western seaboard of the United States (19.94 per cent). The plant's operator, Sakhalin Energy, is looking to increase its nominal annual output from 9.6m to 15m tonnes. This would enable Russia to ramp up its LNG exports in 2015-2020, before other exporters launch new capacity. The Sakhalin-2 project alone, however, only has resources to run until 2041. Putin said in mid-April that the plant's plans could be implemented if it were also to draw upon the output of the Sakhalin-1 project.

Why the Asian market? Gazprom is the world’s leading exporter of natural gas; the company accounts for about 30 per cent of global gas supplies via pipelines. But almost all Gazprom exports are destined for Europe, where the economies are stagnating and competition is growing. As a result, the company has been forced to offer significant price reductions. Furthermore, the system of long contracts, in use for 30 years, is teetering on the brink.



Liquefied natural gas is seen as the future of the Russian gas industry.

Competition Gazprom will face stiff competition in the Asian markets, where many of the world's leading exporters are already well established. Andrey Polishchuk, an expert with Raiffeisen Bank, says the company should have entered those markets years ago. Now the Americans, who used to be gas importers, are on the

verge of becoming exporters; they too are eager to win a share of the Asian markets. In addition, Gazprom will face competition even from its own partners, including the companies participating in the Sakhalin-2 project. Shell, for example, intends to launch several independent LNG projects in Australia, and to reroute some of its LNG suppliers to Asia.

Innovation centres to reap benefits of UAE investment CONTINUED FROM PAGE 1


Russia has taken steps to attract Emirati investment via the UAERussia Agreement on the Securing of Mutual Investments, recently ratified by Russian President Vladimir Putin. The bilateral agreement, which establishes taxfree dividends on investments made by UAE state-owned companies, opens up unprecedented opportunities to attract financing from the Gulf region, experts say. This year was the second time Tatarstan has taken part in Dubai’s Annual Investment Meeting. “Our brand recognition has grown from 10 per cent to 50 per cent in a year,” said Mr Yakupov, the chief executive of TIDA. This year, Tatarstan’s stand was prominent at the exhibition and featured a range of Tatarstan companies and government investment projects, including firms such as Kamaz Export, the Kazan Helicopter Plant and the Zelinodolsky heavy machinery plant. Pride of place, however, was taken by TIDA's Kazan Smart City

Tourism Premium goods see boost in sales

While the ongoing financial crisis has pressured Europeans and Americans into making spending cuts, Russian tourists have been pushing up luxury sales


In the face of the global recession, the world luxury goods market continued its double-digit growth in 2012, expanding 10 per cent to 212 billion euros. Europe is responsible for a third of that total, according to Bain & Company’s Luxury Goods Worldwide Markets Monitor Report. With demand stagnant on the domestic market, Russian tourists are emerging as an increasingly important target group for European luxury brands, said Bain & Company partner Claudia D’Arpizio. In Dubai, for example, Russians proved to be the biggestspending non-resident group, she added.The European luxury goods market has actually been able to

sidestep stagnation thanks to tourists. “Russian tourists have effectively rescued the European market during the ongoing Eurozone crisis,” said Kira Balashova, COO of Jamilco, a group of companies acting as an official distributor of luxury and premium brands in Russia. “Russians tend to spend more during their trips than other European tourists,” said Anastasios Liaskos, Secretary General of the Ministry of Tourism of Greece.“It’s a question of mentality: Russians want to enjoy themselves, and they are willing to pay in order to have a good time.” Russians are the second biggestspending foreign group of customers on the European market, according to tax-free shopping operator Global Blue. The United Nations World Tourism Organisation (UNWTO) estimates that Russians spent $43 billion on international tourism in 2012, placing them firmly among the top five in terms of holiday spending.

The Third Annual Investment Meeting, organised under the patronage of His Highness Sheikh Mohammed bin Rashid Al Maktoum, UAE Vice President, Prime Minister and Ruler of Dubai, took place from April 30 to May 2 at the Dubai International Convention and Exhibition Centre.

Kazan Smart City Kazan Smart City is located 15 km from Kazan, the capital of Tatarstan, a republic within the Russian Federation. The project aims to develop four economic clusters: an international business centre, a knowledge and education centre, a park, and a special economic free zone for hightech manufacturing.

project and Innopolis, a tech city and innovation centre envisioned as Russia's future IT hub and a source of economic growth.


Luxury brands get filip from Russians

Investing in Dubai

Kazan Smart City will turn Kazan into a modern business hub.

The 17th St. Petersburg International Economic Forum (SPIEF) will take place on June 20–22, 2013. The forum is dubbed the “Russian Davos”, and rightfully so, considering its scale. Its main focus reflects the economic challenges currently facing the world: “Finding the Resolve to Build the New Global Economy”. The fact that Russia currently holds the rotating G20 presidency adds extra weight to the event. “This year, the G20 agenda will be crammed into the forum’s programme,” said Igor Koval, director of the Department for Investment Policy and Development of Private/Public Partnership under Russia’s Ministry of Economic Development. The issues include, among other things, encouraging investment in order to propel economic growth, managing public debt, reforming the international financial system, developing energy markets in a sustainable way, and boosting global trade. It is widely expected that the main topic for discussion will be


the reinvigoration of the economy and the achievement of sustainable economic growth; this is a fairly urgent task that many countries are now facing. The key factors affecting global economic development, as well as the steps needed to restructure the global economy and encourage sustainable growth, will be discussed as part of the “Global Growth Agenda” theme. The forum will bring together key representatives of the global business community, as well as the political and economic elite. They will take part in the traditional and highly regarded SPIEF “Sessions that Change the World” series. Two more highly relevant topics on the agenda are “Russia’s New Horizons” (top-priority development areas for the Russian economy, as well the country's international standing, to be attended by representatives of the Russian government), and “New Catalysts for Change”, the latter of which focuses on the potential of cutting-edge technologies and innovative approaches to resolving economic and social problems. In addition, the SPIEF will also host its traditional summit of energy companies. Last year, Rosneft signed a series of contracts on access to its Arctic shelf, including deals with Italy's Eni and Norwegian giant Statoil.



Special Report

Yekaterinburg ideal for Expo 2020 Russia has presented Yekaterinburg’s bid for Expo 2020 at the 152nd session of the International Exhibitions Bureau in Paris. Deputy Prime Minister Arkady Dvorkovich led the Russian delegation. “Yekaterinburg is a young city,” Dvorkovich said. “It is developing rapidly and has a high industrial, as well as research and educational, potential. We are confident that holding Expo 2020 there would help provide a new incentive to its development and that of our nation as a whole.” The Russian city’s competitors include Izmir (Turkey), Ayutthaya (Thailand), Dubai (UAE), and São Paulo (Brazil). Yekaterinburg is Russia’s third city by most socio-economic criteria, after Moscow and St Petersburg. The city already has considerable experience of hosting major international events. “Yekaterinburg has successfully hosted SCO and BRIC summits, the Russia-Germany meeting, and the annual Innoprom industrial innovation exhibition - attended by

guests from fifty countries,” said Yevgeny Kuivashev, Governor of the Sverdlovsk Region, of which Yekaterinburg is the capital. Moreover, the city will host matches at the FIFA World Cup in 2018. Preparations for this are already under way. The Russian government has promised that the facilities required for the Expo would be built concurrently. Total construction costs might run into dozens of billions of dollars. Prominent Russian entrepreneurs are expected to invest in Yekaterinburg’s preparations for the Expo, in addition to government funding at different levels. Exhibition pavilions will be located on 182 hectares, the rest being reserved for hotels, offices, restaurants and stores. After the Expo is over, all the infrastructure and buildings will be adapted for the city’s use: hotels will be converted into apartment buildings and student residences, and pavilions into offices and business/ entertainment centres.





For almost 20 years now, June 12 has been considered a holiday in Russia, but for most of that time many Russians have found it vaguely incomprehensible. Back in 1990, its symbolic significance was more obvious than its content. One by one, the parliaments of the Soviet republics had all passed declarations of sovereignty, and the Russian republic could not remain on the sidelines. The Russian parliament, then called the Congress of People’s Deputies, finally passed their own declaration on June 12 – the same dayYeltsin was elected Russia’s first president. The choice of election day was made for Boris Yeltsin's team, as they feared that any delay would harm their candidate's chances of securing a first-round victory, since voters would be more focused on the upcoming summer vacation season. The authors of Russian statehood then wanted to copy the idea


Every country has its national day, usually associated with its declaration of independence. But Russia is different, since it existed as a great empire for centuries before it emerged again, out of the Soviet break-up two decades ago. The process by which Russia (the dominant republic in the Soviet Union) became separated from the other socialist republics was a long and drawn-out, even messy affair. But one moment stands out when Russia’s modern-day sovereignty was first established – June 12, 1990. On that day, Russia’s first president, Boris Yeltsin, was elected, and the same day Russia’s parliament adopted a Declaration of Sovereignty. He and his team of advisors conceived it as a kind of Americanstyle “Independence Day” – and indeed, it was a crossing of the Rubicon that was to lead to the creation of modern Russia as we know it today. Now the Russian government is seeking to promote the “Russia Day” as a genuine national holiday, says Gleb Cherkasov, deputy editor-in-chief of Kommersant.

of the US Founding Fathers, who issued their own declaration of independence from Britain in 1776. This explains the decision to make the date of the adoption of the Declaration, with its inherent symbolism, a national holiday. Gennady Burbulis, then a key adviser to Yeltsin, attached great importance to symbols: the president of the new Russia had to be elected on the same day as the Declaration of Sovereignty. That was part of the approach: we are building a new country, a new state, and

The red, blue and white flag of the old Russian empire was quickly accepted by the people and became a symbol of the new democratic Russia of the 1990s.

new traditions, so the date must bear an ideological hallmark. In 1994,Yeltsin decreed that June 12 should be a national holiday — but by that time, as Russia struggled with the aftermath of the collapse of the Soviet Union, the date was beginning to lose some of its allure.

1. In August 1991 thousands of people took to the streets of Moscow to protect the new Russia from a military coup arranged by a group of hardline communists.



2. The break-up of the Soviet Union was marked by the removal of the symbols of the communist regime. In this picture, citizens destroy a monument to Felix Dzerzhinsky, the founder of the Soviet secret police.



The informal name of 'Independence Day' also became a bit troubling for the country. “Independence of what, and independence from whom?”Russians asked, as in June 1990 the collapse of the Soviet Union still seemed unthinkable. At the time, the Declaration of Sovereignty was widely seen as just a part of the political game between Yeltsin and Mikhail Gorbachev, the then-president of the Soviet Union. The collapse of the USSR – described later by Vladimir Putin as “the greatest geopolitical catastrophe of the 20th century” – was not at first seen as such by Russia’s new leaders. But soon the radical democrats in Yeltsin's team began to lose their clout, and by 1994, Yeltsin's entourage needed the holiday as confirmation of their entitlement to power.Yet his government was not particularly fond of remembering the circumstances and slogans by which that power had been attained in the early 1990s. For that reason, ever since the mid-90s, June 12 has been wel-

Dear compatriots! I send my heartfelt greetings to you on the occasion of the National Day of Russia. It is the main holiday of the Russian state and is intended not only to bring together people of different generations, cultures and religions in Russia itself, but also to unify the citizens of our country with the millions of Russians liv-

comed but not necessarily understood by all: a kind of coffee break sandwiched between the May holidays and the summer vacations. But as time has gone by, it has assumed a more official and ceremonious air. The event’s official website described the fifth anniversary thus:“And for the first time the holiday really was worthy of such a description. The capital of Russia was adorned with banners and posters wishing everyone a ‘Happy Independence Day!’ Some cities held parades and concerts in honour of the occasion.” The final break from the original concept occurred in 1998, when Yeltsin renamed the holiday“Russia Day.” The Declaration of Sovereignty, the founding fathers, and the march back to the pre-Bolshevik era were all left behind. Ahead lay the default, the end of the war in Chechnya, Vladimir Putin, and the new unknown Russia. The red, white and blue tricolour flag of the old empire was quickly accepted by the people, and became a symbol of the new democratic Russia.

ing elsewhere in the world. I have arrived in the UAE only recently, but have already been able to see how responsible and careful our compatriots here are in maintaining ties with Russia and keeping the spirit of a Russian home alive in distant Arabian sands. I would like to emphasise that for the new Russian state, the anniversary of whose formation we celebrate today, the meaning and purpose of existence is the safety and well-being of its citizens, regardless of their place of residence. For the leaders of our country, Russian expatriates are one big family, the interests of which our great power intends to defend in every possible way. Happy Russia Day! With wishes of health, success, prosperity and peace to you and your families! ALEXANDER EFIMOV AMBASSADOR OF THE RUSSIAN FEDERATION IN THE UNITED ARAB EMIRATES


Sochi Olympics

Russia Beyond the Headlines congratulates all fellow-countrymen on our national holiday Russia Day!


In August 1991, President Boris Yeltsin had to defend Russia's sovereignty against a military coup.

Preparations for the Sochi Olympics are on the home stretch. Test competitions are almost over and the Olympic Village is scheduled to open officially in approximately eight months’ time. “The infrastructure for our Games is the most advanced in the world. Virtually all facilities have been designed from scratch and they are newer, more innovative, and more technological than all other such stadia or tracks,” said Dmitry Chernyshenko, President of the Sochi 2014 Organising Committee. He added: “Russian Railways JSCo was assigned the most challenging construction project and they have done an excellent job, I should say. It is a combined route from Adler to Krasnaya Polyana, consisting only of bridges and tunnels. The railway has already carried some experimental traffic and will be commissioned in October.” The 22nd Winter Olympic Games and the 11th Winter Paralympic Games in Sochi will accommodate 5,500 Olympic athletes, 1,350 Paralympians, 25,000 volunteers, and 13,000 journalists. More than 75,000 people will visit the sports facilities at the Olympic Park daily, while the TV audience will reach around three billion. “I was very much impressed by the Ice Cube Curling Centre for wheelchair curling and the Shaiba Arena for ice sledge hockey,” said Sir Philip Craven, President of the International Paralympic Committee.

Special Report


Culture Russia is a true heavyweight in the cultural arena

Taking pride in centuries of achievement in the arts Name an art form, and you’ll find a Russian innovator. From avantgarde to psychedelic art, from Swan Lake to 'son et lumiere', not to mention literature, television and architecture.

gineer. At the age of 15, Melnikov entered Moscow’s leading art university, and by the early 1920s became the city’s best-known architect. He continued building until 1936, with every one of his experimental designs creating a stir.


Modern art was first created not, as many people might imagine, in the salons of Paris, but by Russian artist Kazimir Malevich – who in 1915 turned the art world upside down with his Black Square, which became a universal symbol for the avant-garde. Malevich’s work inspired a generation: from Marcel Duchamp’s Fountain in 1917, to Arnold Schoenberg’s musical theory of avoiding recognisable forms, and the mysterious silence of 4'33'' by composer John Cage - extending even to Dadaist Cabaret and the post-war Arte Povera.

Experimental architecture Another Russian innovator came to prominence a few years before the 1917 Russian Revolution, and in the space of two decades created some of the world’s most original architecture. Konstantin Melnikov, born to a poor railway worker’s family, was effectively adopted by a rich en-

Literary giants Russian literature first came to prominence in the 19th century with Leo Tolstoy’s epic novels, the troubled works of Fyodor Dostoevsky, and the popular plays of Anton Chekhov. Yet before them, it was poet Alexander Pushkin – the father of the modern Russian language – who in the space of a quarter of a century almost single-handedly adapted Western literature to his homeland, reshaping the established European genres to add particularly Russian features, and inspiring Russian writers ever since. The work of 19th century satirists Nikolai Gogol (Dead Souls) and Nikolai Leskov (Lefty) opens a door to understanding the Russian outlook on life, which possibly owes its complexity to the very structure of the Russian language, with its intricate syntax and morphology. Both Leskov and Gogol were masters of wordplay, producing prose that could make even Marcel Proust jealous. Though their

novels are thrilling and picaresque, they lose much of their charm in translation and in a sense pale in comparison with the likes of Jean Cocteau or T S Eliot.

Stage and film But while the best examples of melodious Russian speech are lost on non-Russian speakers, you can still enjoy the country’s rich musical heritage. Pyotr Tchaikovsky’s ballets and operas grace the world’s leading theatres from Sydney to Boston, connoisseurs appreciate the forefather of 'son et lumiere' (sound and light), Alexander Scriabin, and classical pianists remain in awe of Sergei Rachmaninov. Among other things, Russia takes pride in its achievements in stage productions (remember Diaghilev's Ballets Russes), and in acting technique. Mikhail Chekhov, who emigrated to the United States, introduced Hollywood to the famous Stanislavsky Method, in which most modern actors are well-versed. Meanwhile, Russia can boast all-time great film directors such as Sergei Eisenstein and Andrei Tarkovsky In a broader view of culture, it is also claimed that television was first invented in the ancient Russian town of Murom by Russianborn inventorVladimir Zworykin.

TIMELINE of our country, with fundamental shifts in politics and economy, and with deep changes in our mentality and values. Russia Day is a holiday for every citizen who understands that the success of the country depends on their personal efforts. We can build a thriving Russian state only through the joint efforts of the authorities, businessmen, civil society and ordinary citizens. Dear friends, I send my hearty congratulations to you on the occasion of Russia Day! Today we celebrate a holiday which is connected with a turning point in the modern history


Some key dates in modern Russian history



The new Constitution of Russia is adopted by national referendum on December 12, 1993. President Yeltsin immediately proclaims that “The state has changed its legal identity.”


In 1998 Russia joins the Group of Eight (G8) the forum for the governments of the world's eight wealthiest countries. The country thereby confirms its continued status as a world power.

Vladimir Putin is elected President of Russia. He has since been widely credited for overseeing a return to political stability and economic progress in Russia, ending the crisis of the 1990s.

Economy In the years since the break-up of the Soviet Union, hard lessons have been learnt

Russia's road to modernisation Twenty-two years after the collapse of the USSR, the Russian economy is tackling fresh challenges with fresh ideas as it continues the process of reform. VIKTOR KUZMIN SPECIAL TO RBTH

In 2009, the Russian economy fell by almost 8 per cent, alarming many citizens, who feared a repeat of the crash in 1998, when whole branches of industry came to a standstill and the most systemically important banks went bust. But it turned out that Russia had learned the hard lessons of the late 1990s, grasping the importance of living within one's means. For 13 years, the government did not allow a budget deficit, and only last year, during the election period, did federal expenditure exceed revenues by 0.1 per cent of GDP. Russia's public external debt is now among the lowest in the world. According to Timur Nigmatullin, an expert at the analytical agency Investkafe, as of April 1, 2013, it stood at just $49.8 billion — with national GDP at approximately $2 trillion.

The main "thank you" should, of course, be reserved for energy consumers. Oil and gas make up more than 50 per cent of budget income (based on 2012 figures), making the public finances extremely sensitive to fluctuations in world commodity prices, on the one hand, but recessions and global downturns relatively painless, on the other. Meanwhile, the share of oil and gas revenues - currently 10.5 per cent of GDP - is gradually decreasing. The government plans to reduce the figure to 8.5 per cent by 2015. But back in 2010, then-Finance Minister Alexei Kudrin predicted that the share would drop to 14 per cent only by 2020. When the USSR collapsed, Russia's economic structure was quite different - in tune with the requirements of a planned economy, but hopelessly ill-adapted to market conditions. It is fashionable to criticise Russia for being too slow in making progress, but 22 years ago much of the current system simply did not exist: for example, a competitive banking sector. In the Soviet Union, there wasn't even a stock exchange.

Nowadays, total market capitalisation stands at 20 trillion rubles, or 32 per cent of GDP. The government plans to turn this figure into 100 per cent of GDP by 2018. Moscow has set itself the ambitious goal of becoming one of the top ten international financial centres, but so far it lags behind in 64th place. On February 15 this year, the Moscow stock exchange held its own IPO. The combined exchange was estimated at $4.2 billion, a fifth of the capitalisation of the Hong Kong Stock Exchange, but comparable in value to London and Tokyo. Another result of the restructuring was the development of the service sector. Ninety per cent of the goods sold by the USSR were produced domestically. After the transition to a market economy, most enterprises were unable to adapt quickly to the new conditions, which in the late 80s and early 90s caused empty shelves and long queues, even in Moscow. Today, 99 per cent of retail sales are generated by the private sector, and small business accounts for more than half of turnover, although retail chains are gradual-

ly increasing their share — now almost 22 per cent. A few years ago, Russia set about modernising its technological infrastructure, and government programmes gave impetus to the development of the IT industry. In 2011, the online economy amounted to roughly 0.6 trillion rubles, equivalent to 1 per cent of GDP, while 2012 saw the sector grow by about 30 per cent. Overall, the economy of all internet-dependent markets amounted to 2.52 trillion rubles, comparable to 4.62 per cent of GDP, according to RAEC director Sergei Plugotarenko. Russia's IT exports are expected to match its arms shipments by volume within 5-6 years. In terms of the size of the domestic IT service market ($10.7 billion), Russia already ranks in the world's top 20. Although the Russian government has repeatedly assured that it is becoming less dependent on raw material exports, the share of primary goods in the country's GDP has not stopped rising. But this increase is due to price dynamics rather than structural failures in the economy.

Russia's IT-sector is developing rapidly. The country’s most popular Internet search engine Yandex held its IPO in 2011.



Events Annual midnight treat for art-lovers


Culture vultures flock to Moscow's Museum Night

Russian ballerina wins Prix Benois

hibition Hall, near the Kremlin, allowing visitors to enjoy live music in the open air until 5am. Other popular destinations were Winzavod and Artplay – two of Moscow's major contemporary art venues. This year's logo, a glowing electrical hare, was designed by France’s Philippe Parreno, and symbolises the need to move lightning-fast to catch as many exhibits as possible. The Museum of Soviet Arcade Machines had lines of people waiting up to three hours, The Moscow Times reported its director Alexander Stakhanov as saying, that he decided to put some of the game

The Russian capital's museums gave a free pass to more than a million culture-hungry people for this year's nocturnal event. MARIA SEMENDYAEVA SPECIAL TO RBTH

The Mariinsky enters the 21st century A modern addition to St. Petersburg's most iconic theatre opens its doors to both acclaim and scepticism, while director Valery Gergiev basks in the glow of accomplishment. PAULINE TILLMANN SPECIAL TO RBTH

The new Mariinsky Theatre in St. Petersburg, named Mariinsky II, has been a decade in the making and dogged by false starts and controversy. The distinctive glass and limestone building opened in May with a lavish gala attended by PresidentVladimir Putin, who was born in the city. The $700 million brainchild of famed artistic director and conductor Valery Gergiev, Mariinsky II is situated on the Kryukov Canal, directly opposite the original 1860 building, to which it is linked by a pedestrian bridge over the canal. The new theatre sits in the heart of historic St. Petersburg and its modernist structure is accentuated by the walls of onyx which surround the auditorium. The hard lines of the building are softened by the amber-coloured mineral, which was shipped in from Italy, Iran, Macedonia and Turkey. The 2,000 seat concert hall is a signature work designed by Ca-

nadian architect Jack Diamond, who placed great emphasis on maximising the acoustic experience. Diamond had designed the Symphony Hall in Montreal and the Four Seasons Centre for the Performing Arts in Toronto. Gergiev visited both and was particularly impressed by the acoustics. The auditorium at Mariinsky II, for instance, has only three balconies instead of the standard four

The new theatre is likely to focus on opera, while ballets will continue to be staged in the 19thcentury building. or five. In combination with the original theatre, and a concert hall finished in 2006, it creates what even The NewYork Times labelled a“St. Petersburg arts complex with the scope and versatility of Lincoln Centre.” The new theatre can stage three performances daily and will require much less time between major productions. It represents part of Gergiev’s plans to make St. Petersburg a major international centre for the arts and a

draw for travelling groups from major foreign theatres. Even before Mariinsky II, many critics stated that the Mariinsky had eclipsed Moscow's Bolshoi Theatre. However, for some within the St. Petersburg arts community, the new building stands in stark and jarring contrast to much of the old cityscape. Mikhail Piotrovsky, director of the city's Hermitage museum, has described the project as a“mistake in urban development.” Other critics have compared the theatre to a mall or a hotel. Diamond said that, ultimately, the acoustics will win over the naysayers. “Once residents come and experience a performance, then they can pass judgment,” he said. The new theatre is likely to focus on opera, while ballets will continue to be staged in the 19th-century building. At the gala performance, there was an array of talent and samples from the Mariinsky’s rich history and current roster, including a recreation of Nijinsky’s iconic and lyrical “The Rite of Spring.” Placido Domingo performed“Winterstürme” from Wagner’s Siegmund, and opera star Anna Netrebko offered a preview of an upcoming performance of Verdi’s Lady Macbeth.

About 250 museums and art galleries were open to the public – twice the figure in Berlin. machines outside, and offer guests in the queue drinks from a Soviet vintage cocktail machine. "Feel the moment,” Stakhanov said.“Don't try to visit more than two museums. If it is too busy, just go out for a walk and try to enjoy the summer night.”

Museum Night in Moscow began with colourful street shows this year.

'Come and Play' wins the Discovery Prize at Cannes Film director Daria Belova from St. Petersburg, who is currently studying at the German Film and Television Academy in Berlin, has been awarded the Discovery Prize at the Cannes Film Festival for her short“Come and Play” (“Komm und Spiel”). Belova’s work was the only German production that made it into the Semaine de la Critique programme, which runs alongside the main programme of the 66th Cannes Film Festival. “Come and Play”tells the story of a boy growing up in Berlin who likes to play with his toy gun – but then his imaginary war starts to become reality. The 30-minute film about post-WWII relations between Russians and Germans, which Belova both wrote and directed, is her third offering. The invitation to take part in the festival came as a complete surprise to the student filmmaker, who graduated from the Faculty of Philology and Arts at St. Petersburg State University before going on to work as a journalist. Anastasia Zobnina, Kommersant

Literature One of the greatest Russian novels is available on-line

Stephen Fry gives Eugene Onegin a new lease of life British author and dramatist Stephen Fry has decided to create a new reading of Alexander Pushkin's verse novel Eugene Onegin for the English-speaking world. ALEXANDRA GUZEVA RBTH

Stephen Fry's striking performance of Pushkin's classic work is available as a free download or can be listened to online. The website offering the free download also has a short vignette about the history of Eugene Onegin in English translation – of which there have been more than 40 attempts. The first English edition of the novel was translated by Henry Spalding in 1881, 48 years after the original Russian publication of the ‘collection of varied sections’ originally written and published as a part-work, which grew to be a serious literary event that advanced the Russian language and the overall genre of the novel.



Theatre A new venue and a new era for a historic theatre


Moscow celebrated its seventh Night of the Museums on May 18 by inviting a staggering 1.2 million people into its museums and cultural hotspots free of charge all night. About 250 museums and art galleries were open to the public – twice the figure in Berlin on its equivalent Museum Night. The event is now such a success, with lines of up to a kilometre outside many museums, that Russia’s Culture Minister,Vladimir Medinsky, has suggested holding it several times a year. Apart from the city’s traditional draws – the Pushkin Museum and the Tretyakov Gallery – Muscovites and visitors to the capital could this year head to Catherine the Great’s historic Kuskovo Estate for a free concert, take a nocturnal mass bike ride until 2:30am, watch a Battle of the Bands between jazz and classical orchestras in Gorky Park, or see one of the world’s largest digital art events, the Vienna sound:frame Festival. The show was broadcast on the facade of the Manezh Ex-

Olga Smirnova, a 24-year-old ballerina with the Bolshoi Theatre, has won Prix Benois de la Danse, one of the world’s most prestigious ballet competitions. News of the decision of the Benois jury came as she was performing on the stage of the Bunka Kaikan concert hall in Tokyo. Olga Smirnova is especially famous for her on-stage depictions of tragic heroines. Experts have praised her depth of character and the wonderful plasticity of her body. Her roles in La Bayadere,The Pharaoh’s Daughter and Diamonds have brought Olga world renown and recognition. Sergei Mingazhev, Vesti



Stephen Fry aims to introduce Pushkin to new audiences in the West.

Fry has recorded the translation by James E Falen (1990). Although overshadowed in the Western world by Dostoyevsky, Pushkin’s Eugene Onegin was a literary inspiration for Byron’s Childe Harold. With this fresh exposure, Onegin will no longer languish in Ras-

kolnikov’s shadow, nor share his crime and punishment. The project can be downloaded at in mp3 and mp4 format for iTunes. A complete list of the novel’s translations can be found at http:// onegin/






he outcome of the Syrian civil war will obviously have an impact on Russia’s standing in the world and influence in the Middle East, not least as it has staked so much credibility on supporting Bashar Al Assad. However, accounts of Chechens from Russia's volatile North Caucasus region taking part in the uprising also highlight the potential risks for Russia at home. Last year, reports began circulating that there were Chechens among the several thousand foreign fighters struggling against the Syrian regime. The hard evidence was limited, though, and seemed to suggest only a handful. Furthermore, there was nothing to prove that they were not locals. Syria has a population of perhaps 20,000 ethnic Chechens. Given that they are mainly Sunnis, many have no reason to back the Alawite regime. Besides, the Chechens have become popular bogeymen for Russians and some Westerners alike, with journalists and analysts eager

to see their hand in everything from organised crime to terrorism. It was easy to ignore or disbelieve these accounts. Indeed, they were almost certainly alarmist exaggerations. Since then, though, three things have begun to become clear, all of which have worrying implications for both Russia and also the rebels’ Western backers and many of their regional supporters.

According to some within the movement, the North Caucasus is second only to Libya as a source of fighters. The first is that there indeed appears to be a growing number of Chechens within the rebel movement, including many from the North Caucasus. According to some within the movement, the North Caucasus is second only to Libya as a source of foreign fighters, although many were expatriates studying at religious schools outside Russia.

The second is that these Chechens are disproportionately drawn to the more radical, ultra-Islamist rebel factions. The Al Nusra Front, a rebel unit that the US government has designated a terrorist Al Qaeda organisation, numbers several within its ranks. Its leader, known as Abu Mohammad Al Golani, may come from the Syrian Chechen community evicted by Israel from the Golan Heights. More directly, the so-called ‘Immigrant Brothers’ are a force drawn purely from expatriate jihadist fighters and are commanded by a Chechen known as Omar Abu Al Chechen. Third, and most worrying, is that many of these jihadists see Syria as just one more battlefield in a global struggle. Rather than just fighting to bring down the Assad regime, they see this as a means to create an Islamic state which could be the base for future operations. As a result, despite the enthusiasm and experience of many of these volunteers, Brigadier Selim Idris, the rebel Free Syrian Army’s chief of staff, has begun trying to discourage them from coming. He has appealed for them to remain

at home and “just send us weapons or funding or even pray for us,” precisely as these volunteers tend to be jihadists, whose presence complicates the rebels’relationship with Western backers. Their presence attests to the growing rift within the opposition between moderate and extremist elements. It also raises the question of where these fighters will go once the war in Syria is over. The presence of Libyans in Syria emphasises the rise of a“jihadist international” willing to travel from hotspot to hotspot in the name of the cause. This is not new. From its nationalist beginnings, the conflict in Chechnya acquired an increasingly jihadist dimension from the later 1990s. Foreign warlords such as the Saudi-born Ibn Al Khattab and Abu Omar Al Saif became key figures in the conflict and Al Qaeda representatives such as Khaled Yusuf Muhammad Al Emirate, known as Muhannad, funded rebel commanders. All three men are now dead and the centre of gravity within the insurgency has moved out of Chechnya, into Dagestan and Ingushetia. Here the anti-government gangs, the jamaats, remain essentially nationalist, uninterested in the wider politics of global jihad. Doku Umarov, self-proclaimed head of the “Caucasus Emirate,” claims overall command, but his authority is limited. However, a wave of veteran fighters from Syria, both Chechens and allies from other battlefields, backed by new funds and weapons, might again shift the balance. Umarov is a jihadist, and has publicly backed the Syrian revolution. He would likely be the beneficiary of any such influx, which could help galvanise his moribund war and further radicalise the North Caucasus insurgency. While the Russian authorities will clearly do what they can to prevent this, securing the North Caucasus border has proved problematic. Ironically enough, this gives Moscow a reason to hope the fighting in Syria drags on, including the probably inevitable civil war which would follow the regime’s fall. Once it is over, after all, there is a chance the forces of the “jihadist international”will return home. 23463

Mark Galeotti is Professor of Global Affairs at New York University.





t is almost exactly 15 years to the day that the first G8 meeting took place in Birmingham, UK. It was an informal forum of the world’s eight leading industrial nations, to which Russia had just acceded. Fifteen years later, Moscow has not only become a member of nearly every international club, but it has also gained experience chairing most of them. But has Russia taken a place among the global leaders – the nations that decide the fate of the world?

A difficult path to the table Birmingham '98 was a crucial milestone for the new Russia. Since the fall of the USSR, BorisYeltsin had sought membership in exclusive clubs in order to reclaim the symbolic status of a great power. Since then Russia has turned from a debtor into a donor, and now discusses with the countries it used to ask for money how to help the single European currency or to bail out certain eurozone members. Russia has long since earned its place in the most prestigious club on the planet. That said, the state of affairs within the club and the environment surrounding it have changed dramatically since the late 1990s – and not for the good of the G8.

New realities, new dilemmas In the mid-1970s, at a time when a mechanism for informal consultations among the leading Western economies was just emerging, the point was to hold extremely frank discussions about the real state of affairs in as closed a format as possible. As they expanded (from the original G5) and attracted more attention, the summits gradually turned into a political show. However, fundamental shifts in the global power balance gradually stripped the narrow-circle meetings of much of their importance. At some point it became clear that discussing the global

economic outlook without China was simply impossible. But welcoming Beijing into the G8, a community of democracies, wasn’t acceptable either. The emergence of the G20 at the height of the 2008 crisis has resolved this dilemma, although the G20 has failed to become a global government. Nevertheless, every country that has found itself at the helm of the G20 has tried to use the opportunity to fashion itself as a responsible global power. Now it’s Moscow’s turn.

Packaging your interests Russia has repeatedly presented initiatives on global issues, yet all of them have fallen flat. The reason is twofold. On the one hand, Russia is yet to learn how to demonstrate leadership in the new world, because of the inferiority complex it still feels following the collapse of the USSR. Russian politicians have not yet mastered the art, so brilliantly perfected by their Western colleagues, of wrapping their own selfish interests in the packaging of altruism. On the other hand, global initiatives simply no longer work in the modern world. There is no infrastructure within which to work in order to implement ideas. In the 15 years sinceYeltsin first attended the G8 meeting as a fully-fledged member, Russia has fulfilled and even over-fulfilled the task of achieving a high international status set by its leadership back then. But it’s still unclear what actual role it will have to play in the years to come. Once again, just as in 1998, when Yeltsin led the country into the G8, it’s the quality of Russia’s domestic development rather than its ability to present itself correctly at international forums that will ultimately play a decisive role in determining the country’s global status. Fyodor Lukyanov is Editor-inChief of Russia in Global Affairs magazine and chairs the Council of Foreign and Military Policy.



he Russian economy does not require a loose monetary or credit policy, rather a balanced development of the financial sector, which should act as the facilitator rather than the main engine of economic growth. The Russian Central Bank has pursued a fairly tight monetary policy over the past three years, holding the base rate high at 8.25 per cent in an effort to curb inflation. This was a vital objective. Unlike most Western economies, Russia faced a serious risk of stagflation following the onset of the global economic crisis.

But this policy is limited because current inflation is detremented by institutional factors alongside monetary ones. In other words, inflation is currently being driven not only by interest rates or money supply policies, but also by the prices charged by the natural monopolies, as well as by weak business activity. Prices charged by the infrastructural monopolies are growing 10-15 per cent yearly, fueling growth in utility tariffs and related prices. Meanwhile, the economy is reacting sluggishly to price stimuli. By mid-2012, output had returned to pre-crisis levels, but producer prices were up 32 per cent on 2008. The economy now needs greater coordination between monetary, structural and institutional policy.


The Central Bank will have to adjust its strategy and try to find a better balance between financial stability and economic growth, even though, under the country’s constitution, it is responsible only for monetary policy and price stability (not economic growth). And there is no reason to expect any surprise moves or drastic policy changes when Sergei Ignatiev is replaced by Elvira Nabiullina as the bank’s head. The main challenge facing Nabiullina will be to plot a course that maintains macroeconomic stability while also fostering economic growth. It is a big challenge, but central banks in the developed world are increasingly beginning to target jobs and growth.The Russian Central Bank cannot ignore

The main challenge facing Nabiullina will be to plot a course that maintains macroeconomic stability these problems, for economic as well as political reasons. The bank will also face colossal pressure from many quarters to sacrifice macroeconomic stability for the sake of economic growth. It may find it difficult to persuade its opponents, who fear that growth triggered by such a trade-off is unlikely to last, and that in the longer term it would lead to a new bout of crisis.


In the current institutional environment, an economic stimulus policy which includes higher spending, lower rates, and pumping more liquidity into the banking system will produce the desired acceleration of growth. But any gains in economic output would then be lost to future financial turmoil amid growing systemic financial risks and structural imbalances. Several other social and economic problems will have to be addressed before the country can enter a sustained period of growth. Macroeconomic stability is a top priority. The country’s “credit history” over the past two decades demonstrates that the government cannot afford to run the risk of financial and monetary destabilisation.

A new economic policy could be based on a transition from a ‘demand economy’ to a ‘supply economy’. Stimulating demand (especially from the public sector) in current circumstances would mostly stimulate imports and inflation rather than domestic output. That is why the Russian economy does not need a loose monetary or credit policy, but a balanced development of the financial sector, which should be the facilitator rather than the main engine of economic growth. Sustainable growth should come from a radical improvement of the business climate. Vladimir Mau is an economist and Rector of the Russian Presidential Academy of the National Economy and Public Administration.






Travel Explore one of the world's most remote regions




How to make Russian Apple Cake

Chukotka: the final frontier

Jennifer Yeremeyeva JOUNALIST


Chukotka's short summer is an opportunity to experience the unspoilt beauty of the Arctic.

Battered by Arctic and Pacific winds, Chukotka is Russia's most inaccessible region. Here, amid the unique flora, fauna, and mysterious heritage, you feel like a speck in the silent wilderness. IRINA RESHETOVA RBTH

Where two oceans meet Chukotka lies at the north-eastern tip of Russia and Eurasia, just across the Bering Strait from Alaska. It has an area of 721,500 square kilometres and is Russia's most sparsely populated region. Chukotka has just 50,000 inhabitants, half of whom belong to indigenous northern peoples.

The seasons of the Arctic

Late June marks the coming of spring, when thousands of migrant birds fill the sky. The melting snow turns the tundra into an impassable, soggy labyrinth. But spring here is short and the Arctic summer arrives in July or August.

The vast hilly tundra spaces of Chukotka are covered in moss, dwarf trees (tiny birches, willows and other trees which creep along the ground) and grass. During the short summer, Arctic berries, mushrooms and flowers make the tundra colourful and fragrant. After a period of rain and fog, the first snowfalls start in late October and continue until June. Shrouded in Arctic night, Chukotka sees only a couple of hours of sunlight a day in winter. Recordbreaking winds can reach up to 288 kilometres an hour, and in winter you can see the Northern lights here.

The way of life Chukotka may seem puzzling at first. For instance, all doors open inwards. In winter, many houses are buried in snow. To leave home in the morning, people have to open the door inwards and dig a tunnel through the snow. The indigenous population of Chukotka, the Chukchi and Eskimos, are cheerful people with

Sport Russia's unlikeliest success of all


The world's coldest country is hardly the place you would look for world beaters in beach sports. Yet it took Russia’s beach soccer team just six years to evolve from a group of enthusiasts to world champions. The team was founded by Spartak Moscow player Nikolai Pisarev. In 2005, he became head coach of the national team in a sport that was then unknown in Russia. Beach soccer is very different from its big brother. The small playing area makes it more dy-

In summer you can glimpse the natives hunting whales. In a show of respect, the Chukchi cut a slice of whale meat to throw into the sea as a kind of blessing, to help the whale heal and return. One of the most mysteri-




namic than association football. There is also less reliance on pure strength, and technique is of paramount importance. “When we first started playing beach soccer, we were enthusiasts,” says Team Russia captain Ilya Leonov. The newborn Team Russia progressed in leaps and bounds. In its first appearance in the Euro Beach Soccer League in 2007, the team won the bronze. The Russians made it to the quarter finals at the 2008 and 2009 World Cups before triumphing in the 2011 edition (FIFA decided to skip 2010). The 2011 success was no fluke for Team Russia. Their world triumph was followed by victories in the Intercontinental Cup – beach soccer’s second most important

Ancient mysteries

ous monuments of Arctic culture is Whale Bone Alley, located on the uninhabitedYttygran Island in the south-east of Chukotka. The alley consists of two 500-metre-long rows made of the ribs and skulls of polar whales. The Pegtymel Petroglyphs are another interesting relic left behind by the ancient Eskimos. The 2,000-year-old drawings, etched on cliffs at a height of 20–30 metres, depict scenes of hunting The peoples of the region and strange human-like creatures with mushhave a rich room-shaped heads. heritage.

CSKA defy expectations to win Russian Premier League

World's coldest nation hits the beach running Beach soccer should be an oddity in a country which is snowbound for six months. Yet despite the odds, Team Russia has become a global trendsetter.

strong traditions. Every winter they hold dog- and deer-sled races. In summer they hold the Beringia Festival, at which craftsmen display their wares and people from all over Chukotka compete in national sports.

The Russian beach soccer team is now dominating competitions.

tournament, held annually in the United Arab Emirates. Russia beat Brazil in the finals in 2011 and 2012. The next World Cup will take place in September 2013 in Tahiti, and Leonov and company are hoping to replicate their success from two years ago. 23439

The fact was that CSKA had lost a number of key players throughout the campaign to injuries, especially to the forwards. Despite losing the attacking pair of the Czech Republic's Tomáš Necid and Seydou Doumbia from the Ivory Coast, manager Leonid Slutsky kept the team winning without them. The return to the team of CSKA fan favourite Vágner Love from Brazil also helped the club seal the Premier League title. The Brazilian shouldered the role not only of forward but also playmaker, where he was especially valuable – it was just at this time that the team's main assist-maker Keisuke Honda was injured.Vágner scored five goals and had the same number of assists in nine matches. In addition to scouting, experts put the club’s success down to the

trust that exists between its president and the manager. Back in 2009, CSKA president Yevgeny Giner put his faith in Slutsky, who was a talented coach but who had not yet won anything. He displayed a degree of restraint surprising for sports managers in refusing to sack Slutsky last season, when CSKA only managed to finish third in the Premier League. There was a touching moment after the title-clincher against FC Kuban: Vágner ran up to Giner holding the champions’ cup and handed the trophy to his boss, shouting in Russian, “This is for you.” After five fruitless years, CSKA had finally managed to win the title. In the end, the continuity, patience and restraint of the red and blues’ management proved to be of greater value than Zenit and Anzhi’s multi-million transfers.

While other cuisines separate pastry dough from fruit in cakes and pies, in Russia, the two are mixed together, which I find is a delightful way to experience the contrasting flavours of tart apple and creamy dough. This cake is easy to make and flexible in terms of ingredients.


Ingredients • 1 cup of caramel dissolved in apple juice • 75 ml (1/3 cup) of cherry, plum or other berry preserve or jam • 50 grams of dried apple slices, 50 grams of dried cherries, 50 grams of raisins • 750 grams of tart apples, peeled, cored, and diced into small pieces • 3 ripe plums, stone removed, chopped roughly • 1 tsp of cinnamon • 1 tsp of ground cloves • 1 tsp of ground ginger • 1 tsp of salt • 6 eggs • 100 grams of sugar • 150 ml of sour cream • 10 grams (1/2 tablespoon) of butter • 5 tbls of fresh breadcrumbs Preparation 1. Preheat the oven to 350 F (180 C). Adjust the rack to the middle level. 2. Place the dried fruit, jam, and caramel dissolved in apple juice into a saucepan over medium heat. Bring to a boil, then simmer for 10 minutes. Remove from heat, cover, and let sit for at least 20 minutes. 3. Butter a 9-inch springform or bundt pan and coat with breadcrumbs. 4. Separate the eggs. 5. Toss the fresh apple and plum pieces with the stewed dried fruits and rum. 6. Beat the egg yolks and sugar in a standing mixture at medium speed until slightly thickened and creamy (2 minutes). Add the sour cream and beat slowly for 20 seconds. 7. Add the flour, spices, salt, and apple mixture to the batter. 8. In a clean bowl, beat the egg whites until they form stiff peaks. 9. Gently fold the batter into the egg whites until just combined. 10. Pour the batter into the springform or bundt pan. Twirl the pan sharply to the left and right a few times to release any air pockets. 11. Bake in the preheated oven for 40 minutes until puffed and golden. Cool for 10 minutes and serve with ice cream or whipped cream.

Russia beyond the headlines distributed with Gulf News  

Special supplement for Rossiyskaya Gazeta (Moscow, Russia) distributed with Gulf News

Russia beyond the headlines distributed with Gulf News  

Special supplement for Rossiyskaya Gazeta (Moscow, Russia) distributed with Gulf News