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A Business Report from The Economic Times. In association with Rossiyskaya Gazeta
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...Marching towards a common future
WEDNESDAY, JUNE 30, 2010
Central Asia What can pacify a perfect storm of political instability, economic hardship and ethnic tension? War against the Afghan drug
Kyrgyz crisis: Time for action SERGEY PONOMAREV_AP
Recent ethnic clashes in Kyrgyzstan have spawned a humanitarian catastrophe, thus underlining the need for a global response to ensure regional stability. SHWETA CHAND RIR
When long-simmering ethnic tensions exploded into mindless savagery against minority Uzbeks in Kyrgyzstan, the former Soviet republic, which few Indians had heard of earlier, made it to the front pages of Indian dailies and primetime TV. Around 100-odd Indian students were feared trapped amid spiralling bloodshed, evoking widespread concerns about their safety.They were finally airlifted safely to Kyrgyz capital Bishkek, but the incident underlined the increasingly interdependent nature of the world we live in. The worst ethnic violence in decades sent alarm bells ring-
An Uzbek girl after Kyrgyz policemen conducted house-to-house searches in Kyrgyzstan
ing in Washington and Moscow, both of which operate air bases in Kyrgyzstan. The US has called for an international
probe while a concerned Moscow is debating the pros and cons of military intervention to stabilise the former Soviet re-
public. Although the official toll is 208, independent estimates say around 2000 people were butchered and 200,000
people fled to Uzbekistan.The humanitarian catastrophe is still unfolding, triggering fears that unrest could spill over into other parts of Central Asia, a strategic energy-rich region that is getting infected by Islamic extremism. Key organisations with a stake in the stability of the region like Russia-led Collective Security Treaty Organization (CSTO) and the Organisation for Security and Cooperation (OSCE) are already at work trying to douse the fire. A coordinated international response can go a long way in restoring security, reviving economy and protecting civil rights to prevent the region's first parliamentary democracy with a per capita income of $2,100 from sliding into a fullscale civil war. FOR MORE ON RUSSIA'S CHALLENGES IN CENTRAL ASIA, GO TO PAGE 6
With the US and NATO dillydallying, Russia has launched an all-out diplomatic battle to press the international community to jointly kill the curse of Afghan drug trafficking. GRAHAM STACK SPECIALLY FOR RIR
It’s Moscow’s version of 9/11. Russia has launched an all-out war against the Afghan narcotics that has made the country the world's largest per capita heroin consumer.Anti-drugs czar Viktor Ivanov is leading the battle to put the issue on top of the global agenda. He is convinced that the battle against Russia’s spiralling heroin addiction will be won or lost in the Hindu Kush. A string of statements by top Russian officials in recent days, orchestrated by Ivanov, including a high-level international conference in Moscow shows Russia placing the anti-narcotics drive in Afghanistan on an equal footing with the so-called war on terrorism. CONTINUED ON PAGE 4
Policy Kremlin redefines role of foreign investors and hopes to make Russia a truly attractive destination
Medvedev offers promise of change ALEXANDR MIRIDONOV_KOMMERSANT
“We have changed” was the main message of Russian President Dmitry Medvedev’s address to the 14th St Petersburg International Economic Forum eariier this month. IGOR UGOLNIKOV ITOGI MAGAZINE
Yet, the direction set by Medvedev runs counter to the mainstream ideas of the postcrisis global economy, which is not keen to change. All over the world, liberalism is giving way to aggressive protectionism. Defying the general trend, Russia is opening up to the world, choosing a more liberal economic path. It is no secret
that Russia has not seen an open economic policy over the reform period, which has lasted for nearly two decades already. Given the course of modernisation announced by the president, treading water would be self-destructive.This means that Russia is set to see a second and this time massive wave of liberalisation. This is akin to a U-turn. Indeed, this has been confirmed by a series of important political decisions voiced by the president recently, including a dramatic reduction in the economic areas closed to foreign investment (the list of socalled strategic companies has been decreased by 80 pc), eas-
ing the tax burden on investors and promoting the Skolkovo innovative model in the entire country. All this means that the direction set by Dmitry Medvedev is a long-term direction and far from window-dressing. Another sign of approaching liberalisation is the idea of creating a major financial centre in Moscow, which has been repeatedly voiced by the president. The necessary conditions are there: Russia’s financial assets are worth around $1 trillion – something even leadingWest European economies cannot boast. CONTINUED ON PAGE 2
Banking on the African dream Two top investment banks of India and Russia join hands to tap new opportunities in Africa, revealing a new business synergy between emerging economies. BEN ARIS RIR
The global financial crisis has proved to be a blessing in disguise for the BRIC countries. Six months ago, India’s Kotak Investment Banking, a subsidiary of the powerful Kotak Mahindra group, joined forces with Russia’s leading investment bank Renaissance Capital to tap new business opportunities in the emerging markets. President Dmitry Medvedev speaking to participants of the St. Petersburg International Economic Forum.
CONTINUED ON PAGE 3
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Moscow cuts red WHAT'S NEW tape on visas to usher in more foreign workers
Medvedev offers promise of change
CONTINUED FROM PAGE 1
"Russia is in the right place at the right time now," says Kingsmill Bond, head of strategy at Troika Dialog. "In the 1990s, Russia was in chaos, so there was little reform. Between 2000 and 2003, there was a first attempt to reform, but after oil prices soared over the next five years, this ran out of steam as there was so much money. In the last two years,
the government has been completely occupied with fighting the crisis. But now, there is a real need to make reforms, but more importantly, there the government also has a real desire to reform." “Changes require time. But no doubt, we will do it,” Dmitry Medvedev assured his audience. Meanwhile, external economic factors are not favourable as the EU, Russia’s No 1 trade partner, prepares to
NIKOLAUS VON TWICKEL THE MOSCOW TIMES
French President Nicolas Sarkozy says he wants to work with Russia to give developing nations a larger say in how to regulate the global economy.
close up in the anticipation of a new crisis.America, too, hesitates in how wide to open its doors.And Russia goes its own way, as always. In other words, if Medvedev’s main message at the St. Petersburg forum was “we changed”, the next forum’s slogan should be“We opened up”. Read more at www.in.rbth.ru
The Anti-Stinger in action SERGEI PTICHKIN
Among the many novelties featured at the Eurosatory-2010 international arms salon in Paris, only the Russian exhibit caused a real sensation. The Zenit Design Bureau, based in Zelenograd outside Moscow, demonstrated an active system to protect helicopters against modern anti-aircraft missiles, including US Stingers. Russian designers have accomplished what no one else in the world has managed to do. In the mid-1990s the US announced that it had created a complete system for protecting aircraft against heat-seek-
US Humvee vehicles, carrying upto 288 Stinger missiles
ing, self-targeting missiles. "Nemesis" system probably exists, but more likely than not only on Air Force One. At any rate, over the past fifteen
r8 ptembe e S / 1 1 August
years, the device with the mythical name has never been publicly displayed. Russia, by contrast, has shown its anti-aircraft missile de-
www.rbcnews.com English-language business news en.rian.ru/business RIA Novosti newswire en.fondsk.ru Strategic culture foundation magazine rt.com Russia Today TV channel
Companies hiring foreign specialists to work in Russia will no longer have to obtain quotas for work permits and visas on corporate permits to hire foreigners, nor will they have to submit diplomas proving candidates' qualifications, according to a law that President Dmitry Medvedev has signed. The new rules apply only if the employer is Russian or the local branch of a foreign company, and the employee's annual earnings exceed at least two million rubles ($60,000).Work permits and visas will be valid upto three years, up from the present maximum of one year. With the new laws in place, Russia will, according to auditing firm Ernst &Young, "go from having one of the least welcoming to one of the most positive immigration systems in the world for top talent." Foreign business representatives welcomed the reform. "This is something we have been pushing for years," said Andrew Somers, the president of the American Chamber of Commerce. But experts say much depends on how the new rules will be applied.
fense system to the whole world. It is a unique opticalelectronic jamming device developed by a team led by Professor Alksandr Kobzar. For promotional purposes, the device has been referred to as President-C. At its heart is an optical-electronic jamming system, a metal ball about half a metre in diameter. The keys to the system are found inside the ball, which are driven by unique mathematical algorithms employed in the control system’s software. The mathematics involved were developed by experts in Samara and Zelenograd and constitute unique Russian know-how.
Full version at www.in.rbth.ru
ILIYA PITALEV_RIA NOVOSTI
COOPERATION RUSSIAN-INDIAN TURNOVER UP BY 26 PC IN FIRST 4 MONTHS Trade turnover between Russia and India had increased by 26 pc in the first four months of 2010, said Vladimir Putin during a meeting with Indian Minister of Commerce and Industry Anand Sharma in mid June. “Despite the global crisis, we have managed to preserve with our Indian partners positive tendencies. In 2009, trade turnover went up by 7.5 pc,” Putin said. Russia and India “have many big projects, all of them are being successfully developed.” How effective is Russia-India
cooperation today? The problems and prospects of the bilateral economic ties were discussied at the Russia-India business session during the St Petersburg Economic Forum. According to Hari Bhartia, head of the Confederation of Indian Industry (CII), Russia and India should join efforts in innovative spheres, also stepping up overall cooperation in the economic sector.
More about the discussion www.in.rbth.ru
FRIENDSHIP PHOTO ALBUM SHOWCASING INDO-RUSSIAN TIES It’s a nostalgia trip down decades of time-tested India-Russia friendship and also a peep into the future. On the eve of Russia’s National Day June 8, a 120-page coffee-table book containing photographs from the 1940s to the present day, was released by K. Ragunath, a former foreign secretary of India, at a function in New Delhi. Compiled by the Russian embassy, the album contains rare photos like that of India's first
TWICE A MONTH IN TWO DAILIES
prime minister Jawaharlal Nehru absorbed in deep discussions with Russian artist Nicholas Roerich in the picturesque Kullu Valley (above). It is a testimony to "what has been already achieved and will help visualise more graphically the vistas of strengthening the strategic cooperation, set new ambitions goals and facilitate steady progress towards new horizons," said Russian ambassador Alexander Kadakin. RIR
Septem ber 29
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www.rusembassy.in Embassy of the Russian in India www.cdi.org/russia/johnson Johnson’s Russia List www.russiaprofile.org Analysis of business, economic, political and cultural trends
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Banking on the African dream CONTINUED FROM PAGE 1 The alliance aimed to use Renaissance’s franchise in Russia, Africa and the former Soviet Union and Kotak’s Indian experience to help big companies from those countries buy into each other’s markets, the two companies said. It’s clearly a win-win deal and was firmed up after well though-out calculations. Kotak was looking for a new partner after Goldman Sachs pulled out of a joint venture in 2006 and opened its own offices in Mumbai.“We wanted a partner to facilitate cross-border deal flows, but we have no ambitions to open our own offices overseas – keeping pace with India is already a big challenge,”say Kotak managers. Finally, they zeroed in on Rencap, backed by Russian billionaire Mikhail Prokhorov, as they were looking for someone with experience in important sectors for India such as mining, minerals, oil and gas, but most importantly a bank that could open boardroom doors to the biggest companies in these fast growing economies.“Rencap was strong in these areas, but also in Africa.That is an important market too but we didn’t want to do a string of deals with players at the country level as we need to jointly market ourselves, go on road shows and so on.You need one partner that can do all this with you.” At first glance, a bank with Kotak’s standing in India could have joined forces with any topnotch international investment banks, but HasnenVarawalla, deputy head of IBF and head of corporate finance who is in charge of the Renaissance Capital side of the joint venture, says a BRIC-based investment bank has more to offer.“Who is our competition?”asksVarawalla.“All the major international investment banks are present in the emerging markets, but some 60-80 pc of their business remains in the developed markets of Europe and the Americas.They pay lip service to the emerging markets but they don’t have many people on the ground.We offer international standard investment banking service but delivered locally. This is not‘suitcase banking’.”
It’s clearly a winwin deal and was firmed up after well though-out calculations Most African FDI comes from Europe and Middle East
SOURCE: FDI INTELLIGENCE
The lure of new opportunities in Africa acted as an additional spur to compel Kotak to focus on emerging markets. Initially, when Indian companies went global a decade ago when Tata Tea bought Britian’s Teatley Tea, there was a tendency to snap up premium brands or look for companies to boost their reach to international consumer markets. But now the focus has shifted to emerging markets.“The problem with the developed markets is there is too much competition and the Indian companies don’t want to compete head-on. It makes more sense to go to the emerging markets, which are smaller,but have higher growth rates and less competition,”
says Falguni Nayar, Managing Director & CEO, Kotak Investment Banking. Renaissance Group CEO Stephen Jennings said in an interview in May that he was planning a big push to expand its footprints in Africa to include 21 countries by the end of this year and up the contribution to the bottom-line from the current 15 pc to 25 pc over the next two years. Rencap started working in Africa in 2007 with only six countries. Last year, Rencap was the most active bank on the continent with 18 deals in 10 countries, including the headline-hogging $955 mn sale of Central African Mining to Kazakhstan’s Eurasian Natural Resources Corporate.
Much of the work Rencap and Kotak have done together has focused on India-Africa deals. “We continue to see ourselves as mainly a Russian/African investment bank, but we also see valuable cross border flows between the emerging markets,”saysVarawalla. And the game seems headed this way, with a growing recognition of huge untapped business opportunities between India and Russia, a point underscored by Russian Prime MinisterValdimir Putin during his visit to India in March. Putin vowed to boost banking cooperation with India through joint ventures, identified IT and telecom as future areas of economic cooperation and resolved to scale up $7.5 bn bilateral trade to $20 bn by 2015. “We should think about the future,”Putin said prophetically.Keeping this in mind, Varawalla says the partners are working on a string of deals that he hopes will be announced“in the near future.” The main attraction is Indian and Russian economies almost perfectly complement each other: Russia has the raw materials and India is rich in talent, entrepreneurship and ICT. Still, the Russia-India partnership is lagging behind that of the Chinese. China has become a key player in Russia’s future, as its business foray is being pushed by the politicians who are backing up their policy with tens of billions in investment capital.“The state plays a significant role in Chinese investment overseas.The Chinese have also shown themselves to be able to move quickly,”saysVarawalla. India’s ties with Russia, on the other hand, are being forged primarily by the private sector and is more deliberate, which does facilitate stable and longterm relations, saysVarawalla. “India is very diverse.There is no central agenda like there is in China and Russia. Instead it is the collective action of many firms that are all being drawn to the market,”says Nayar.The future perhaps lies in this mutual synergy, diversity and private enterprise which makes for ideal conditions for investment banks to flourish.
NEWS IN BRIEF India to invest in Russia's pharma sector India is ready to invest in the Russian pharmaceutical industry, said India's Commerce and Industry Minister Anand Sharma during his visit to Russia. Among other resources and technologies, India is very keen in developing biotechnologies, nanotechnologies, as well as genomics and bioinformatics, thereby entering the Russian healthcare industry.“Indian manufacturers can benefit from the fact that Russia is in the midst of pharmaceutical sector reform, known as Pharma 2020,”says Frost & Sullivan Analyst, Dominika Grzywinska. RIR
Russian govt to take 20 pc in MTS India Sistema Shyam TeleServices said it expected to receive an investment of more than $600 mn from the Russian government as early as September. “By the end of the third quarter or fourth quarter, we realistically might be closing” the deal after the government approves the proposal, chief executive Vsevolod Rozanov said.The investment will give Russia a stake of about 20 pc in the Indian wireless operator, said Sistema spokesman Vsevolod Sementsov. RIR
Russia ﬂoats out 2nd frigate for Indian Navy A Russian shipyard took out of dry dock in June the second of three frigates being built for India's Navy, aYantar shipyard spokesman said. The first of three Project 11356 frigates, named the Teg, was floated out last November.The third frigate, Trikand is due to be delivered in 2011-12. RIA Novosti
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The Afghan drugs are mostly consumed in Russia, Iran and in the EU countries.
Afghan heroin with unclean needles, Russia has pressed all “We consider drug addiction its big hitters into play to stir to be one of the biggest and international forces in Afmost serious threats to our ghanistan to directly engage country’s development and opium farmers and drug proour people’s health,”Russian ducers. Prime MinisterVladiPresident Dmitry Medvedev mir Putin in Istanbul (June 9), said at an international Mos- deputy prime minister Sergei cow conference (June 9) that Ivanov in Singapore (June 7), the world community must as well as foreign minister work out a joint approach to Sergei Lavrov at the Moscow combat Afghan drugs. conference reinforced this “Fundamentally, before our message loud and clear and eyes, a new global agenda is stressed on strangling the herunfolding – the narco-threat oin problem at its source in Afas a challenge to humanity ghanistan’s killing fields. and one of the strongest fac- Russia’s anti-drug drive in Aftors in global instability,” ghanistan, however, could creIvanov said at the same con- ate tensions with the Obama ference organised by Federal administration, which has Service for Narcotics Control ended a military drive of de(FSKN).“The priority here is stroying poppy crops, pursued the liquidation of Afghan nar- by predecessor George Bush. cotic production.” Obama’s key Afghanistan polWith around 2.5 mn addicts icy-makers, including Special and an estimated 1 mn HIV Envoy Richard Holbrooke and positive people in Russia, most head of international and US of them infected by injecting forces General Stanley Mc-
Main global drug supply routes
Food and agricultural policy in Russia: situation and trends
Chrystal argue crop eradication would fuel the insurgency by depriving farmers of livelihoods and drive them into the arms of the Taliban. Ivanov has bitterly attacked the US U-turn. Moscow believes the US-led forces in Afghanistan turn a blind eye to opium production because the US is not directly affected by the heroin flood.Washington,however, has pointed out it is not Russian troops who will die if eradication is resisted, resulting in a spike in insurgency. Antonio Maria Costa, head of the United Nations Office on Drugs and Crime, whom Ivanov has attacked in the past for opposing crop eradication, conceded that production could bounce back again in Afghanistan in 2011 due to a likely price hike caused by the blight afflicting the opium crop this year. Costa has argued that affected countries, including Russia,
WAR AGAINST THE AFGHAN DRUG CONTINUED FROM PAGE 1
english.ruvr.ru Information from the Voice of Russia www.mid.ru Russia’s Foreign Ministry www.memo.ru/eng/memhrc/index.shtml Human Rights Watch
mn is the estimated number of drug addicts in Russia. Afghan heroin accounts for 90 pc of the Russian narcotics market.
The narco-threat is a challenge to humanity and one of the strongest factors in global instability
pc of the world's opium comes from Afghanistan. In nine years of NATO-led presence in Afghanistan production of opiates has grown 40 times.
should do more to reduce their own domestic demand for heroin, with $13 bn heroin consumed in Russia and $20 bn in the EU annually. Competing claims and conflicting interests led to high emotions during the Moscow conference. US ambassador to Russia John Beyrle dismissed
it as ‘fanciful’ Russian claims and said that international forces were complicit with drug smugglers in failing to inspect outbound cargos. Afghan voices pointed out that it was the Soviet occupation of Afghanistan in the 1980s that created conditions for opium production by destroying intricate irrigation systems required for farming licit crops in Afghanistan. Conversely, there were Russian calls for crucial NATO transit to Afghanistan via Russia to be made conditional on crop eradication and for transit countries like Tajikistan, economically dependent on migrants’remittances from Russia, to do more to prevent drug transit. “What is new here is that Russian leaders, including President Medvedev, are saying for the first time that international drug trafficking, and what they call ‘narco-aggression’, is a greater threat to Russia than international terrorism,”said Alexander Rahr of German Council on Foreign Relations. “But Russia needs to do more in terms of domestic combating of drug addiction to make its international concerns more credible.”
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Diplomacy Russia-India-China triangle can rewrite the rules of the global game
The trio tinkers with world order
SPECIALLY FOR RIR
sumed by 15 mn people, two thirds of them are heroin addicts. The revenues generated by drug supply from Afghanistan total up to $65 bn annually.
thousand people worldwide kills Afghan opium every year - more than any other drug. The Afghan opium is con-
Need for a global anti-drug coalition: Ivanov
VIKTOR IVANOV, the head of Federal Service for Narcotics Control Is NATO ready to take real steps to curb heroin production and trade flowing from Afghanistan? NATO is a military organization, not a political one. They should be using their resources to destroy the plants containing narcotics. In Afghanistan, I spoke to the head of the NATO military council. He put it straight, as a military person – ‘as soon as the decision is made, we will start destroying the poppy fields’. Did your opponents in Brussels agree with any solutions you suggested? All spokesmen said that it would
not be productive or reasonable to destroy the poppy fields. It sounded like a hint to the Afghan authority, that hey, it would not be democratic if you take away a chance from farmers to cultivate drugs. This sounds like a conflict. Russia is telling NATO that thousands of people in Russia are dying from heroin, and NATO says no. It is not a conflict. The Russian government analysed the situation deeply. We discuss this issue with Russian leaders, with the Security Council, with the anti-drug committee that includes over 30 ministries. A change has happened, as we have analysed a huge number of letters and calls people made to us – that was what mobilised the government to confront this threat. We say that all the world's governmental and non-governmental institutions should consolidate their efforts in the global struggle for the health of their societies and create a global anti-drug coalition. Full version at www.in.rbth.ru
Setting their differences on the bilateral track aside, the three countries, comprising 20 pc of the total global landmass, 39 pc of the global population and around 25 pc of global GDP, joined hands in reiterating their call for the creation of a multipolar world order and pushed for a greater presence of emerging and developing economies in international decision-making bodies. This unanimity of views on recasting the global governance architecture was later reaffirmed by the three countries, along with Brazil, at the second BRIC summit in Brasilia in April this year. The ministers agreed that trilateral dialogue in areas such as global economic governance architecture, climate change, trade policy and development cooperation would contribute greatly to global peace and prosperity, said a joint communique. Besides pressing global issues, the trilateral format is also designed to a push mutual cooperation in a wide swathe of economic and developmental areas, including agriculture, disaster mitigation, health and medicine. Cashing in on their high rate of economic growth and a new business synergy, the three countries have identified pharmaceuticals, infrastructure, IT and energy have as the focus areas. As China gets to host the next trilateral meeting of foreign ministers later this year, it would be germane to analyze premises that underpin Russia-India-China format. On the face of it, it’s an unusual getting together of big countries which are seen as rising powers in an increasingly multi-polar world with some shared interests, but which happen to have also conflicting
interests and priorities. Zhao Gancheng, Director for South Asian Studies at Shanghai Institute of International Studies, China, poses a question whether trilateral cooperation is sustainable since China, India and Russia are neither strategic allies nor enemies. Trilateral cooperation, Zhao contends, should be seen as a new model of cooperation, seeking common economic benefits but also operating on the basis of a broad consensus about seeking improvement in an imbalanced world order, without challenging the stability of the existing order.
sian Far East, and about China’s economy dwarfing its own,”says HarshV. Pant, a lecturer at King’s College London. However, increasing trade and investment and a common resentment of the US unipolar power will ensure that these differences don’t go out of hand. Vladimir Putin, then Russian president and now prime minister, is a strong votary of trilateral cooperation and he forcefully articulated it when Chinese President Hu Jintao visited Russia in March 2007. The improving bilateral relations of India, Russia and China with each other, therefore, will enhance the clout of RIC in global affairs and provide them yet another platform to meet and iron out their differences. Terrorism, which threatens people of the three countries, is an important area where trilateral coordination and action can make a world of difference. Energy is another key area. Russia is a dominant supplier of oil and gas; China and India are energy deficit, but significant suppliers of manufactured products and services. “Energy is an obvious area of mutually beneficial cooperation if the three countries are willing to think creatively and boldly,”suggests Rajiv Sikri, a former secretary in India’s external affairs ministry. The long-range significance of the trilateral format, which is now being reinforced by other groupings like BRIC and SCO where India may be inducted as a full-fledged member in the near future, lies in their success in giving an added impetus to
RIC can bring an alternative worldview to the West-dictated discourse on key global challenges The future of trilateral format will also depend on the trajectory and content of bilateral relationships each country has with the other. For all their efforts to play down sources of their tensions, including a decades-old border dispute,India and China are widely seen as competitors and rivals in an emerging Asian century. However, in the past few years SinoIndian relations have shown greater maturity and stability as the two countries decided to focus on expanding trade and investment by putting complex issues like the border dispute on the backburner. Deft diplomacy has yielded results, with China overtaking the US as the single largest trading partner of India with over $50 billion bilateral trade. There is also a growing realisation that increasing cooperation on global issues could give them greater leverage on international issues where the West tends to impose its views through the West-controlled multilateral institutions. Sino-Russian relations, too, are not entirely devoid of friction. “Russia has reasons to worry about China’s rising profile in East and North-East Asia, about Chinese immigrants overrunning the Rus-
When foreign ministers of RIC countries met in Bangalore last year, Indian media was abuzz with reports of a trust deficit between Beijing and New Delhi. But all attempts to whip up mutual suspicion failed.
the ongoing push towards a diffusion of global power.“The burgeoning trilateral consultations and cooperation constitute the most serious and credible endeavour to craft a multi-polar world,” writes Sikri. For Russia, since the concept was first mooted by former Russian premierYevgeny Primakov in 1998, the trilateral format fits in with the overarching goal of its post-Cold War foreign policy that seeks to create a genuinely balanced and stable multi-polar world. If China can shed its calculated ambivalence towards India’s bid for a permanent seat in the UN Security Council and come out unequivocally in support of New Delhi, the trilateral’s collective clout in international affairs will grow even further. While it is not a strategic alliance yet, as all three countries have been at pains to point out in their joint declarations that it is not directed against any third country, a euphemism for the US, Russia, China and India should widen the ambit of trilateral cooperation in areas that directly impact the lives of people in the three countries. If the three key countries of an emerging multi-polar world can overcome their mutual differences and blend their strengths and capacities, they can bring an alternative worldview to the dominant Westdictated discourse on key global challenges of the 21st century.
Manish Chand, Senior Editor with IANS, is New Delhibased writer on international issues
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FACING TOUGH CHOICES Igor Torbakov RUSSIAPROFILE.ORG
he ongoing turmoil in the southern region of Kyrgyzstan – the worst violence to hit the country since independence – underscores growing instability in the strategically located Central Asia. The Kyrgyz crisis also highlights the difficult choice Russia will have to make: whether it should or should not intervene to help settle the flaring conflict. The turbulent events in Kyrgyzstan, touched off by the toppling of the clannish and c o r r u p t g ove r n m e n t o f Kurmanbek Bakiev in April demonstrate just how volatile the local authoritarian regimes are – they appear to be still going through the tortuous period of post-imperial readjustment almost 20 years after the collapse of the Soviet Union. But Russia is also haunted by its imperial legacy. The fact that Russia was an empire for a major part of its history is something which cannot be emphasised enough. For a huge land-based empire, protecting its long and often porous borders is a security issue of paramount importance. In fact, constantly expanding its outer periphery, absorbing new lands and creating buffer zones is a set of policies that a land-based empire usually resorts to in order to make its vulnerable frontiers secure. This strategy was also a key factor behind the continental empire’s territorial growth: the same pattern brought Russia into Central Asia in the middle of the 19th century and has kept it there ever since. Although, unlike the Soviet Union, Russia is no longer an imperial state, the former continental empire finds it infinitely more difficult to disengage from its former colonies than maritime empires do. The interpenetration of the imperial metropole and colonial periphery is much more intimate and intensive in the first case. Even after the demise of the empire, territorial contiguity leads to a situation where many challenges presented by the former colonies should be seen and analysed not only as phenomena exclusively pertaining to the sphere of foreign policy, but also as factors directly affecting the domestic situation in the former imperial center. Russia’s principal concern in
For Russia, the only way to make the region truly stable is to act as an agent of change the region remains the preservation of the internal stability of the Central Asian nations. Any local turmoil that might potentially be caused by a botched succession crisis or the escalation of political confrontation by resurgent Islamists challenging the region’s secular regimes or by interethnic clashes is going to be viewed by Moscow as a direct threat to Russia’s own stability and security. Making stability their top priority, Russian policymakers are intent on keeping the local regimes afloat by trying to contain the advance of Islamic fundamentalism and prop up the region’s secular authorities. But these two sets of policies appear to run at cross purposes – Moscow is going out of its way to support those regimes which are, in effect, secular dictatorships: they are clannish, corrupt, repressive and utterly averse to any kind of democratic reform. With their political base remaining very narrow and claims to legitimacy rather flimsy, the
policies toward Central Asia have been deeply flawed. Now, as the death toll in Kyrgyzstan mounts and the number of refugees fleeing across the border into neighbouring Uzbekistan rises steeply, Russia is faced with a painful policy dilemma. As Russia has long been casting itself as the main provider of security in the post-Soviet space, the Kyrgyz crisis appears to represent a moment of truth when Moscow has to deliver. All the more so since the hapless leadership in Bishkek openly acknowledged that it had lost control over the situation and directly appealed to Russia for aid, asking for peacekeeping troops to be urgently sent in. If Russia doesn’t step up to the plate, referring, as it recently did, to the crisis as an“internal conflict”, it risks losing face, prestige and the right to claim the leading role in the post-Soviet Eurasia.Yet, finding the most appropriate way to intervene is not an easy matter. Given Uzbekistan’s wariness of any Russian move in the region, the Kremlin seems to understand that any deployment in Kyrgyzstan is conceivable only within the framework of the Collective Security Treaty Organization. However, if Russia does decide to get involved into the Kyrgyz imbroglio, it will face different kinds of problems – not unlike those the US-led coalition is currently grappling with in Afghanistan. After all, today’s Kyrgyzstan is a failed state: its interim central government is extremely weak, lacks legitimacy and depends heavily on external aid, while the impoverished population is suffering from a deepening economic crisis and is harassed by local thugs, criminal kingpins and drug barons. On top of that, the country is divided along ethnic fault-lines – particularly in the southern regions where the sizeable Uzbek minority is concentrated. The continuing inter-ethnic violence in the south of Kyrgyzstan risks undermining the already precarious stability of the entire country and, in the worst-case scenario, the stability of the neighbouring countries as well. Given the stakes involved in any of the policy options, the choice Russia is facing is tough indeed.
Central Asian regimes are potentially very brittle (as Kyrgyzstan has demonstrated in 2005 and again this year) – with the ever more alienated and impoverished populace becoming increasingly radicalised. Yet Russia, fixated as it is on the struggle against “terrorists”appears to be completely unprepared to deal with any kind of large-scale political turmoil caused by the rising popular discontent and the growing Islamization of the region. Arguably, the Kremlin finds itself in a trap of its own making: for Russia, the only way to make the region truly stable is to be able to act as an agent of change, as a force for genuine modernisation, cautiously nudging the local authoritarian regimes to transfo r m , d e m o c r a t i s e a n d broaden their socio-political base. But the nature of Russia’s own political regime effectively acts as a brake on this progressive kind of policy. As a result, Moscow is compelled to act rather as a conservative force, which seeks to forge ties with the local rulers and back up those regimes that appear to be geopolitically loyal to the Kremlin. The repeated collapse of government in Kyrgyzstan (seemingly the “weakest link” among the region’s authori- Igor Torbakov is a senior retarian regimes) appears to in- searcher at the Finnish Instidicate that Moscow’s previous tute of International Affairs.
www.cdi.org/russia/johnson Johnson’s Russia List www.russiaprofile.org Analysis of business, economic, political and cultural trends en.fondsk.ru Strategic Culture Foundation magazine
A DANGEROUS DRIFT? Andrei Volodin SPECIALLY FOR RIR
he US has been lately becoming more and more active in the Asia and Pacific Ocean region (APR). Washington has assigned an important role to India in the APR, which it keeps trying to make a part of its long-term plan. The US’ overall geopolitical design is determined by three circumstances. First, in the opinion of the US analysts, it is in the APR that the geo-economic axis of the world economy is changing position; this is where the US interests — given the vast size of this region — need“special protection”. Secondly, given the economic growth of China and other APR countries, the US’ principal strategic purpose has become more complex: effective control over global space at a time when the US’ economic, military and political potential is relatively weak. Thirdly, the US’main political aim is still “to hold China’s geo-economic and geopolitical expansion in check”.This aim has proved difficult to realise in light of Russia’s virtual refusal to act as a counterweight to China in the APR and beyond and given that a revival of the economy of Japan (as well as South Korea and other countries in Northeast Asia) depends on closer economic ties with China. This explains why the Barack Obama administration has returned to pursuing a conception of“special relations”with India in order to actively restrain China. This return to the Bush era’s India-US bonhomie has been received positively by three influential socio-political forces in India: 1) the private corporate sector which sees a“strategic alliance”with the US integral to plans to turn India into a“great economic power” by 2030 or 2035; 2) the growing middle class, primarily its most well-to-do segments, which have pinned their hopes on the US as an“outside guarantor”of its way of life in the face of the growing might of inscrutable China; 3) the generals and the officers’ corps, the overwhelming majority of which, Indian analysts say, are prone to see the US as a“producer of top military technology and a reliable supplier of
state-of-the-art combat systems”. This influential elite, which enjoys access to top officials in the Ministry of Defense, is constantly asserting that India must relinquish Russia in favour of the US as its main supplier of military technology. The effective link connecting Washington and Delhi is the affluent and politically active 3-million strong Indian community in the US. The Americans are forever instilling their ideas and notions in India’s scientific institutes and higher education on the assumption that the new generation of Indians is favourably disposed toward the US, its ideas and values. “The American project”of reorienting India’s foreign policy is being carried out in a favourable internal political situation. Its main feature is a weakening of forces opposing the ruling Congress i.e. the Communists and the Bharatiya Janata Party. Finally, an indirect sign of Delhi’s inclusion in the geopolitical designs of Washington is the resurgence
I think the tendencies to the “Americanization” of India’s foreign policy are evident of the idea of an “alliance of four democracies” (the US, Japan, Australia and India) with the possible later inclusion of South Korea in“eastern NATO”(as this“project”is known in Beijing). I think that the tendencies towards the“Americanization”of India’s foreign policy are evident, a view aggressively countered by India’s ruling coalition. Increasingly, Indian diplomats are talking about the“archaic nature”of Nehru’s ideas. After all, the“nuclear deal”and the prospects of acquiring from the US the most advanced types of weapons and military technology — these and other longterm initiatives come from the “very top”and are based on a particular system of geo-economic and geopolitical argumentation.
AndreyVolodin is a Chief Researcher at the Institute of World Economy and International Relations in Moscow.
All articles appearing on page 6 do not necessarily reflect the opinions and views of the editors of Rossiyskaya Gazeta and Russia India Report.
mars500.imbp.ru Mars 500 project website www.esa.int/esaMI/Mars500 Watch video diary from the Mars500 crew www.roscosmos.ru Roscosmos website
RUSSIA INDIA REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_JUNE 30_2010
Space Roskosmos and the European Space Agency collaborate on a project to prove that mankind will walk on Mars
The journey to Mars just got shorter MARS500.IMBP.RU
Russian scientists launched an ambitious record-setting 520-day Mars spaceflight simulation on June 3, a milestone in mankind’s ongoing journey to reach the Red Planet. STEPAN KRIVOSHEYEV ITOGI MAGAZINE.
It’s a scene that looks like a lift from a Hollywood science fantasy. But it’s for real. On June 3, a multi-national crew, comprising three Russians, two Europeans and one Chinese volunteer, lodged themselves inside their windowless cabins for a simulation flight to Mars for 520 days.They will remain on Earth in Mars-like conditions for nearly 18 months, isolated from the rest of mankind with only each other for company. The astronauts will not be able to leave the capsule before the end of November 2011 – the hatch only opens from the outside. The experimental space module, installed in one of the buildings of RAN’s Institute of Medical and Biological Problems (IMBP), is now a hive of frenetic activity. Medics are busily scurrying to and fro, engineers are testing life-support systems, computer experts are tapping away at monitors.
The Brave Six “Choosing a team for the project was no easy task,”says the technical leader of the “Mars500” project, Evgeny Demin, from the IMBP. Out of hundreds of applicants, the institute zeroed in on only the healthiest men, who showed psychological compatibility under extreme conditions; the future astronauts spent the winter in icy conditions in a forest on the outskirts of Moscow - they lit fires, built cabins and lived on tinned food. After rigorous tests, Aleksei Sitev, a 38-year-old engineer, was chosen as the commander of the Mars vessel.The 37-yearold surgeon Sukhrob Komolov and the 32-year-old Aleksandr Smoleyevsky made the cut for on-board doctors.The Chinese space researcher WangYu, 27, Italian engineer Diego Urbina, 27 and French engineer Roman Charles, 31, are a part of the team, imparting a trans-national dimension to the conquest of the Red Planet.
Life on Mars The audacious Mars500 project, a joint experiment by Russia, the European Space Agency and China, will be under-
The six brave young men may be driven by a desire to create history, but the cash incentive is equally strong, powering their space odyssey. Each participant has been given 75,000 euros in royalties, which works out to a salary of $4,500 a month.
taken over the next eighteen months in a simulator, which is made up of five modules. “The first module has a volume of 100 cubic metres and is intended as the crew’s quarters. It has six individual cabins, a common room for relaxing, a kitchen, a lavatory and the main control panel,”says Demin. The second module is the medical centre.All 105 experiments planned for the“flight” will be carried out here. The third module is a storage compartment comprising a gym and a greenhouse, where radishes, tomatoes, lettuce and onions will be grown.The fourth module mimics the capsule lowered
onto the surface of Mars and the fifth module is an“Imitation of the Surface of Mars” where the astronauts have to disembark in special spacesuits. For all the detailed recreation of a real Mars flight, the simulator still bears little resemblance to a real space ship: its interior is panelled in wood and there are calendars and photographs on the walls. Ordinary sand from the seaside has been used to conjure up the Martian terrain and dark blue LED lamps replicate a starry sky. But in the end, it’s not the form, but the content matters. "Goodbye Sun, goodbye Earth, we are leaving for Mars!" wrote
Mars: A Love Story Russia’s Mars dream harks back to the sixties. The first simulations of long space flights started at the IMBP around this time. The first experiment was a simulation of a year’s flight, aimed at evaluating the workability of life-support systems in 1967. “The first Mars spacecraft consisted of only two modules,” recalls Professor Boris Adamovich, the former chief constructor at the institute and a doctor of technical science. Three men lived in a space the size of a sleeping compartment in a railway carriage. Their only link to “Earth” was a radio connection. Once a month, an astronautdoctor was allowed to open
the blind on the window to speak with a supervisor on Earth. The supervisor was a young woman. And the astronaut doctor fell in love with her. They spent hours in conversation. But there were also psychological difficulties. Every week, the on-board technician had a nervous attack. At night, he jumped out of bed and demanded to be let out. “The mission’s chief medic and myself spent the whole night trying to persuade him to stay,” remembers Adamovich. In the end, it was not a thirst for making history, but the lure of owning a Volga car, promised to every participant in the experiment, won him over.
ular doses of news, without any negative information, says Aleksandr Suvorov, a doctor An autonomous supervising the project’s meestablishment dicinal programme.“In their The everyday life on the“flight” spare time, the researchers will will be split into eight hours of be able to listen to music, play work, with the rest of the time chess and backgammon and split into leisure and sleep.The read their favourite books.” day starts at 8 in the morning, They will get their share of prithen there is a medical check- vacy, albeit under the gaze of up, followed by work on the around 70 video cameras scientific programme, lunch, a which will be following the short break, another round of progress of the researchers. Imscientific work, two hours free ages of their activities will be time, supper and sleep. transferred in real time to the The buzz of the outside world mission control, where they and the TV networks bristling will be monitored 24 hours a with breaking news of disaster day by two doctors and a team and catastrophes will be miss- of engineers. ing. But they will be given reg- For the sake of realism, there
the French engineer in a mission diary.
Mars simulation facility
will be a simulated delay in the signal connection.This will get longer as the Mars ship supposedly becomes more distant from the earth.
Rest assured – we’ll get there! Will the human body be able to cope with such a prolonged and testing flight? Suvorov is certain it will. “We must remember Valery Polyakov’s flight into space which lasted 437 days.Therefore, 520 days is not the limit.”“Be rest assured – we’ll get there,”says a confident Aleksei Sitev, the team commander. “The time will come when we will really reach Mars,”he says prophetically.
RUSSIA INDIA REPORT IN ASSOCIATION WITH ROSSIYSKAYA GAZETA, RUSSIA THE ECONOMIC TIMES WEDNESDAY_JUNE 30_2010
www.mosfilm.ru Mosfilm film studio www.cinema.mosfilm.ru Mosfilm online cinema www.kinoeye.org/archive/country_russia.php Web resources on Russian cinema
ANNA ARTEMEVA (3), MOSFILM
Cinema Europe’s oldest film studio has outlasted the Soviet Union and recession to rebuild Russia’s film industry
Reintroducing the Soviet-era studio
A scene from director Pavel Lungin's film "Tsar"
The birthplace of Soviet-era classics like Battleship Potemkin and Uncle Vania, Mosfilm, Russia’s iconic studio, has modernised its old assets and reinvented the Russian cinematic dream anew. VERONIKA DORMAN RIR
It’s a dream factory and a haven of cinematic geniuses. Film icons and masterpieces were born and bred in Russia’s Mosfilm, the largest and oldest film studio in Russia and Europe. From Eisen-
stein’s Battleship Potemkin and Romm’s Pychka, to Tchoukhraïs’ Pure Sky, to Kontchalovski’s Uncle Vania and Tarkovski’s Solaris, Mosfilm has seen it all in its glory days.The experimental workshop, founded in 1924, had by the start of World War II become the first complete studio in Europe, combining a cinematographic village and a production company. And now Mosfilm, that owns rights to hundreds of Soviet-era classics, has defied challenging circumstances, including the global recession, to rein-
vent itself into a hub of modern Russian cinema. “Today, we are at the forefront of the industry and have no reason to be envious of western studios,” says Karen Shakhnazarov, producer, entrepreneur and the president of Mosfilm who has shepherded its rebirth ever since he took over the management in 1998. The dissolution of the Soviet Union endangered the very existence of this cinematic enterprise, but Mosfilm managed to retain much of its sturdy, old infrastructure intact. Now, the new managers are putting
“You don’t have to be a millionaire to live a decent life in Moscow”
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“...I understood about 5 percent of what he was saying and he understood about 10 percent of what I was saying. After about 20 minutes he whips out a St. Petersburg scarf and hands it to me...” “The only people in Russian films who have vaguely threatening accents are non-Russians.”
forms. In those Ali Baba-like caverns, tens of thousands of objects, from all periods, hang in disarray. The undisputed stars of the luxurious secondhand goods are the retro vehicles: a 1913 Rolls Royce, a 1928 BMW 321 and a 1927 Packard as well as other vintage buses and tractors.The most famous cars, objects and costumes are displayed in the studio’s museum and are no longer used for filming. Anyone, however, can rent a costume by the day and be a pirate, a Red Guard or tsarina. Costume rental is one way of making ends meet at the end of the month. The film library is simply priceless and is being used to finance new creative ventures. Riding high on a new entrepreneurial energy, these films have been digitised subtitled in English and made available to the public for a few euros either on a per item or flat rate basis in a virtual video collection that will eventually offer 2,500 old and new movies. The global recession hit the Russian film industry. Mosfilm, too, felt the pinch, reducing its once prodigious output to merely 40-50 films. Denied of public funds, Mosfilm produces mainly television series sponsored by private money. These are large scale projects, “not peanuts”,insists Shakh-
Catch the vibes of Moscow in.rbth.ru/blogs
The man who minted Mosﬁlm anew
those priceless assets to new use, thus generating new streams of revenue in the process.The recording and soundtrack mixing studios (one 6300 m3 room, for example, can accommodate an orchestra of 150 musicians) were designed by European specialists and are equipped with the latest technologies.This enabled a diversification beyond the cinema. “50 per cent of our work is recording music albums,”states Andreï, a sound engineer. A jewel in Mosfilm’s crown is the recreation of a Moscow district at the turn of the 20th century that includes paved streets, stone and wood façades, lamp posts and period street signs. The “Old Moscow” stage has been used since 2004 as a set for more than 40 movies, changing into St. Petersburg,Tbilisi, Copenhagen or any other historical city, as needed. The only downside is a skyscraper, built on the opposite side of the street, which limits shooting to close shots or forces the use of special effects. The dazzling diversity of period costumes and antique cars are added attractions and source of revenue for the studio. Sergei Plohov, head of the costumes and accessories department says that the studio has more than 400,000 pieces of clothing and military uni-
The modern avatar of Mosfilm is the creation of Karen Shakhnazarov, a producer with 13 films under his belt. He took over the studio’s management in 1998. In 1983, he was widely acclaimed by the public and critics for his lively musical comedy, “We are the Jazz”, portraying the difficult beginnings of the jazz scene in the USSR of the 1920s. His last movie, Room Number Six, is an adaptation of Tchekhov’s eponymous short story and a profound artistic reflection on psychiatric hospitalisation.
nazarov.“The movie industry is being rebuilt,” says a proud Shakhnazarov. Now, we only have to find wealthy producers and talented scriptwriters, he says dreamily.
This issue has been conceptualised by INTERNATIONAL MEDIA MARKETING, RESPONSE adqueries@ timesgroup.com Co-ordinator: • Feature Mehernosh Gotla (mehernosh.gotla@ timesgroup.com)